The Alabama commercial real estate market enters 2024 with moderate optimism, bolstered by positive indicators in the retail sector. According to the Alabama Commercial Real Estate Index, Huntsville leads the way in retail expansion demand, followed closely by Birmingham. National retailers are expressing strong interest in expanding their presence in Alabama, with both new locations and expansions on the horizon. However, a lack of quality vacant space presents a challenge, with limited vacancies in many desirable markets. Existing interest rates, construction costs, and market rents will likely lead to a slowdown in ground-up development in early 2024. However, experts anticipate a decrease in interest rates and construction costs, which could increase deal activity later in the year.
Garrick Brown and his team at Gallelli Real Estate undertook the challenging task of tracking projected retail openings across North America. Their team surveyed more than 8,300 retail and restaurant chains, finding:
- A net increase of 21,908+ storefronts planned for 2024
- Dollar stores remain the growth leaders
- Coffee operators like Dutch Bros, Scooters, and 7Brew have aggressive expansion plans
- Direct to Consumer (DTC) operators will continue to open brick-and-mortar this year
For the complete WEBINAR & SLIDE DECK
Real Estate professionals believe that even a brief economic downturn, while unlikely, could present an opportunity to acquire high-quality real estate. They estimate that 80% of the junior box spaces vacated in the past five years have already been filled.
Apparel
The retail landscape is a mixed picture in 2024, with surprising winners and unwavering stalwarts. While children’s wear faces challenges, the apparel sector finds strength in accessories and brand-specific success stories like Uptown Cheapskate and Abercrombie, catering to both budget-conscious and fashion-forward consumers.
Car Washes
Beyond apparel, unexpected niches are booming. Car washes, exemplified by MOD Wash and Take 5, are planning a staggering 590 new locations, capitalizing on the demand for convenience and comprehensive car care solutions.
Experiential Retail
Experiential retail is also thriving, with pickleball leading the charge. ACE Pickleball‘s planned expansion of 45 new courts reflects the surging popularity of this dynamic sport. Similarly, the health and wellness space see established gyms like LA Fitness expanding alongside boutique studios offering personalized experiences in yoga, pilates, and kickboxing.
Convenience
Convenience stores remain a retail rock, with 7-Eleven, Circle K, Casey’s, and Buc-ee’s all demonstrating continued growth. Even department stores are adapting, as evidenced by Macy’s foray into smaller, curated format stores.
This diverse and evolving retail landscape paints a vibrant picture for 2024. From the resurgence of specific apparel segments to the rise of pickleball courts and the unwavering strength of convenience stores, the industry is not merely recovering from the pandemic, it is actively innovating and adapting to changing consumer preferences. The future of retail is anything but stagnant, offering something for everyone and promising continued excitement.
For a deeper dive, listen to a recent discussion I had with Garrick Brown.
You can hear the webinar and download the slide deck here:
