The Sweet 16 of US Retail Markets Square Off

Article originally posted on CoStar on March 28, 2024

As the country’s top men’s and women’s college basketball teams compete to cut down the nets this month, CoStar is getting in on the madness with our inaugural CoStar Sweet 16 of U.S. retail markets. Here we pit the top areas for that property type across the country against each other to determine the strongest demand drivers.

Methodology:

Initial Market Selection: The country’s 42 largest retail markets, each with at least 115 million square feet of retail inventory space, were selected for the tournament.

Regions: Markets were divided into four regions patterned after the men’s and women’s NCAA college basketball tournaments: South, West, East, and Midwest.

Criteria: CoStar scored the markets based on their relative performance in select key demographic and retail space market measures. The top four markets within each region were selected to move into the Sweet 16 and ranked 1 – 4 based on their total market inventory size.

Scoring: Scores were calculated based on the relative ranking of a market against the other 41 largest retail markets in the country. If a market was in the top 20% in a category, it received the maximum number of points. If it ranked in the top 21% to 40%, it received 80% of the maximum, and so forth.

Categories and Point Values: At tip-off, the U.S. retail markets were compared across seven performance drivers, three of which were demographic and the other four fundamental. Demographic drivers accounted for 50 total potential points, and fundamental drivers accounted for 50 total potential points. The table below highlights the drivers used and the maximum points attainable for each driver.

And the winner is… Tampa, Florida!

With a final score of 98 points, Tampa cruised to a 16-point victory over Phoenix in the title matchup. Tampa scored in the top 20% among all markets in six of the seven categories while scoring in the 20th to 40th percentile in the remaining one, inventory per capita.

As a retail market, Tampa continues to benefit from both steady in-migration and a thriving employment market that have supported significant consumption gains across the region and strong demand for retail space. As such, just 3.5% of all retail space in Tampa was available for lease at the end of last year. Minimal availability and strong retail sales gains have resulted in Tampa’s retail rents increasing by an average of 37.7% over the past five years, the most robust rent growth recorded among all markets in the tournament.