In 2024, furniture retailers seeking expansion will encounter a challenging market with limited space availability. As of December 2023, only 4.6% of retail space nationwide was listed as accessible, marking the lowest level recorded since CoStar commenced tracking metropolitan statistical areas in 2007.
The resurgence of brick-and-mortar retail post-pandemic has been brisk, driven by factors on both the supply and demand sides. These factors are expected to continue influencing and restricting store space options for expanding retailers throughout 2024.
On the supply side, heightened financing costs, coupled with reduced capital availability and persistently elevated input costs (such as land, labor, and materials), acted as constraints on retail construction starts in 2023. Construction activity steadily declined throughout the year, reaching a mere 46 million square feet of retail space compared to the substantial 82 million square feet that began construction in 2022. This figure also falls significantly below the prior 15-year annual average of 108 million square feet.
Simultaneously, the ongoing demolition of outdated retail space further diminishes the available stock in the market. Despite facing cost pressures similar to ground-up projects, over 18 million square feet of retail space was demolished in 2023.
While the demand for brick-and-mortar store growth remains robust, the diminishing supply of available space presents a dual challenge for furniture retailers—finding optimal locations at affordable rents.
Ben Haverty has more than 30 years of experience as an executive and entrepreneur in the furniture industry, operating retail stores, home delivery warehouses and regional distribution facilities. As the lead of Colliers Furniture Industry Service Team, he works with Colliers integrated real estate services to provide comprehensive solutions for every stage of the furniture industry supply chain.