Trends and Opportunities in Retail Real Estate
This article by Lindsay Frankel for BiggerPockets suggests that retail remains a dynamic sector with opportunities for investors who stay informed about consumer behavior, engage in forward-thinking practices, ensure the financial viability of properties, and consider upgrades, conversions, and mixed-use retail opportunities. However, it also acknowledges that the retail landscape is evolving, with some sectors outperforming others.
Resilience of Brick-and-Mortar Retail: Despite the initial threat posed by the pandemic and the rise of e-commerce, brick-and-mortar retail has remained surprisingly resilient. Many people still prefer visiting physical stores to see and touch products.
Mixed Performance in Retail: While some major retailers are closing stores due to bankruptcy, new stores are expected to replace them. Retail rents have increased, but investment in retail is declining due to high interest rates.
Suburbanization of Shopping: The shift to remote work and suburban living has led to a decline in foot traffic in urban areas, impacting demand for retail space. Suburban retail vacancy rates are now lower than urban vacancy rates.
Two Economies in Retail: High-end malls and dollar stores are thriving, while middle-range retailers are facing challenges, especially in enclosed malls. Luxury retailers are opening stores in areas that drew new residents during the pandemic.
Innovative Retail Concepts: Retailers are adopting innovative strategies, such as self-service options and in-store pickup, to engage customers. Properties that prioritize health, safety, and sustainability are gaining importance.
*Read more at https://www.biggerpockets.com/blog/commercial-real-estate-has-one-last-asset-class-still-standing
