Anyone reading commercial real estate retail headlines in 2023 can be forgiven for potential mixed-message confusion. On the one hand, there is continuous talk about retail bankruptcies following that of Bed, Bath & Beyond in April. Yet other reports classify retail investments as “the new darling of the CRE industry”. The reality is somewhere in between; like most other commercial real estate asset classes, retail CRE consists of a broad mix of many product types and certain fundamentals have prompted experts to comment on its current state.
Grant Gary with The Woodmont Company commented that “retail isn’t necessarily the‘new darling’ for investors…Yet it’s nowhere near any sort of state collapse.” Jay Hagerman from The Providence Group added that “retailers aren’t saying ‘we’re losing sales or sales are down’, or anything like that”. Scott Grossfeld with Cox Castle & Nicholson noted core fundamentals such as low unemployment and key elements within population having significant disposable income continue supporting strong spending habits – both online and offline shopping experiences remain popular among consumers alike. Chad Byerly from Northmarq pointed out brick-and-mortar remains a primary point for consumer shopping due to convenience offered by online options combined with desire to physically go stores when possible . Pam Goodwin from Goodwin Commercial highlighted lack new construction projects resulting retailers searching existing built locations along drive through components being particularly sought after .
All experts agreed two things: Consumers continue spend money while still enjoying physical experiences associated traditional shopping habits – yet interest rates remain main challenge facing investors owners builders matching sellers expectations what property can sell . Narrowing discussion net lease properties , ongoing uncertainty running against available cash inventory buyers wanting strong tenants long term leases fast fashion brands lack differentiation outdated business models contributing struggles faced several retailers today .
