May Retail Sales Data Shows Strength in Consumer Spending
May retail sales numbers reported throughout businesses operating in national and Philadelphia commercial real estate markets did not disappoint, suggesting a rebound in consumer spending from a slow start to the year. And that’s good news for commercial real estate.
First-quarter consumption related to the U.S. commercial real estate market – including such action taking place involving Philly office space, Philly retail space and Philly industrial space – was relatively weak and volatile, as consumer spending declined on durable goods, such as cars and furniture.
This CoStar Realty Information Inc. report involving U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
The consumption slowdown raised concerns about the health of the U.S. economy, which relies heavily on Americans’ willingness to consume. Despite the choppy retail sales data at the start of the year involving businesses in U.S. and Philadelphia commercial real estate listings, CoStar economists expected consumer spending to rebound. Those expectations were based on the continued strength of consumer fundamentals, including healthy income growth, subdued inflation, rising wealth and access to credit.
May retail sales data from the Census Bureau was in line with those expectations. Retail sales among businesses operating in national and Philadelphia commercial real estate properties grew 0.5 percent compared from the previous month, and the April data was revised higher. Compared to a year ago, retail sales were up a solid 3 percent.
Sales at warehouse clubs and superstores throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – were especially strong in May, as were food sales at supermarkets and other grocery stores. Food services continued to do well, with especially robust growth at limited-service restaurants. By contrast, sales at department stores declined over the past year, dragged down by double-digit declines in conventional chain stores; sales at discount stores, however, have held up better.
While the American consumers who interact with businesses dealing with national and Philadelphia commercial real estate listings appear happy to spend, all this consumption does not translate into demand for physical retail space. The May retail sales data was in line with the ongoing shift in buying preferences. E-commerce continued to grow at roughly four times the pace of total sales – up 12 percent in May on a year-over-year basis. — By Galina Alexeenko; CoStar Realty Information Inc.
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