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Brick and Mortar Retailers Pivot as Store-Based Spending Improves;
Investors Cautiously Optimistic on Single-Tenant Sector

Economic tailwinds aid outlook for tangible retail. The single-tenant sector is at a junction as the second half of the year approaches. Despite inflation and rising fuel prices, during the early months of 2022 retail spending gains have been widely distributed across store-based segments, which excludes purchases made online or at bars and restaurants. This suggests a broader shift in consumer behavior is ongoing, one with an emphasis on physical locations. Reflecting heightened in-person shopping activity, store-based retail sales accounted for nearly two-thirds of all core retail spending in March and April, and inflation-adjusted core retail sales are up nearly 18 percent compared to pre-pandemic recordings. Vendors are responding by bolstering staffs, with 284,000 more people working in retail today than prior to the health crisis. Store-based sales momentum has the potential to remain positive moving forward, as U.S. households have more cash savings than debt, and the economy is expected to recoup all jobs lost during the pandemic by this summer. Companies will accomplish the latter by augmenting pay to fill open positions, supporting overall income growth.