CBRE Researcher Says E‑Commerce’s Threat to Brick‑and‑Mortar Retail Is Overstated

Why It Matters

Anokute’s comments challenge a prevailing narrative that online shopping is rendering physical retail obsolete. By quantifying vacancy, construction, and the share of sales still occurring in stores, the analysis provides investors, developers and city planners with a data‑driven view of where opportunity lies. The focus on service‑based tenants and Sun Belt growth highlights a shift away from traditional department‑store anchors toward experiential and essential‑service concepts, reshaping leasing strategies and capital allocation. If the market continues to absorb limited new supply while maintaining low vacancy, landlords can command higher rents and prioritize higher‑quality, newer assets. Conversely, a misreading of e‑commerce’s impact could lead to over‑building in weaker markets, eroding returns. The insights therefore have direct implications for portfolio positioning, financing decisions and regional development policies.

Key Takeaways

• U.S. retail vacancy fell to 4.9% in Q1, the lowest level since CBRE’s 2005 dataset began.
• Retail construction completions dropped to a record‑low 4.7 million square feet.
• Online sales represent only 16‑16.5% of total retail, leaving 83‑84% to physical stores.
• Service‑oriented tenants (salons, gyms, grocery) are absorbing vacant anchor space.
• New retail construction is concentrated in Sun Belt metros experiencing rapid population growth.

Pulse Analysis

The data presented by CBRE’s Anokute suggests that the retail real‑estate market is in a phase of selective tightening rather than a broad collapse. Historically low vacancy rates create a landlord’s market, enabling higher rents and more favorable lease terms for tenants that can meet the evolving consumer demand for services and experiences. This dynamic is especially pronounced in Sun Belt cities, where demographic trends are fueling both residential and commercial expansion. Developers who have been hesitant to commit capital in the face of e‑commerce hype may find renewed confidence by targeting mixed‑use projects that blend retail with lifestyle amenities.

From an investment perspective, the modest online share of sales indicates that the physical footprint remains a critical component of the retail value chain. While e‑commerce will continue to grow, its incremental impact appears limited in the near term, allowing traditional retail assets to retain relevance. Portfolio managers should therefore prioritize assets in high‑growth regions, focus on tenants with strong foot‑traffic drivers, and consider repositioning older centers to attract service‑oriented brands.

Looking forward, the key risk lies in consumer spending volatility. A slowdown—whether from higher interest rates, inflationary pressures or a shift in consumer confidence—could quickly increase vacancy and pressure rents. Stakeholders must monitor macro‑economic indicators alongside the granular leasing data that CBRE tracks. In sum, the current environment offers a window of opportunity for those who can align supply with the nuanced demand patterns highlighted by Anokute, while also preparing for potential headwinds that could alter the balance.