Link to Article: What’s REALLY Happening to Retail? "Retail isn’t necessarily the "new darling” for investors. On the other hand, it’s nowhere near any sort of state of collapse. Despite the pandemic and current economic situation, the retail industry, with the exception of regional malls, remains fairly strong and is doing much better than other product types.”
Well, much better than office. I am not sure it is doing better than Industrial, Apartments, or Self Storage.
"All the experts agreed on two things: Consumers continue to spend. And they’re continuing to spend in person. Neighborhood/grocery-anchored shopping centers seem to be doing well, because the staples sold by grocery stores and drugstores are always in demand. Also doing well? Luxury retail. This appeals to consumers at a higher income level that are less impacted by higher interest rates and inflation.”
Strong growth and spending in areas like fitness, movie theaters, quick-service restaurants and value segments. Treasure hunt value retailers with the likes of Burlington, Ross, TJ Maxx, Kohl’s and Five Below continue to see very strong consumer interest prompting the acceleration of a strategic growth plan across the United States.”
Spending at local stores and retail centers is great for communities.
“There still appears to be strength in the economy from consumers that have money to spend. Core fundamentals continue supporting retail spending – like low unemployment and key elements of the population with significant amounts of disposable income.”
O-Yes Consumerism, the American Way. Great, stores and restaurants are doing well. Any concerns?
"But in many cases, the brick-and-mortar space might not be available for increasing tenant demand. There’s been a lack of new retail centers being constructed.”
This can cause a slowdown indeed, but it also means higher rental rates for existing properties.
What about the buy\sell market for investors?
"The main challenge facing retail investors, owners and builders probably isn’t a surprise. It’s interest rates."
“This makes it tough to match sellers’ expectations with investors’ expectations of what a retail property can sell for. A degree of skepticism from investors."
Forget buying and sell then, what should tenants and developers be concerned about?
"The ongoing work-from-home trend, combined with higher crime rates in several cities are taking their toll on more traditional department stores. An increase in specialty retailers and fast-fashion brands, along with a lack of differentiation and outdated business models, have contributed to many retailers’ struggles.”
A few valuable insights. Unfortunately, retail is much like the rest of the economy, no signs of certainty.
Contributed by: Kyle Nagy
Kyle Nagy is a founder and Director of CommCap Advisors. Kyle started his commercial real estate career in 1999 as the Real Estate Analyst for the Las Vegas office of GMAC Commercial Mortgage, an international real estate finance company. Prior to leaving and forming CommCap, Kyle was instrumental in the growth and success of the Las Vegas GMAC office and was one of the youngest Vice Presidents within the company. During his finance career, Kyle has successfully originated, underwritten, and closed over $900 million in loans with Life insurance Company, Wall Street Conduit, Bank and Agency Lenders.
As your exclusive advisors, CommCap utilizes proprietary systems, market expertise, and years of experience to secure aggressive financing options that best fit your property. Exclusive correspondent and servicing relationships with Life Insurance Company, CMBS, and Agency lenders ensure a broad and in-depth representation of current market conditions. Our team of advisors craft a loan structured to enhance revenue and allow you to focus on increasing cash flow.
We do not list, sell, manage, or lease property. We only arrange financing and are the best at what we do.