Market Reports 

2017 First Quarter 2017: What’s Up With Retail?

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Quarter after quarter, we send our friends these “State of the Market” updates professing the vitality of the current commercial real estate market. We see an abundance of urban mixed-use projects, speculative warehouses, and more apartment buildings than even Don Kenny could have imagined. All of this with no whispers of glut, surplus or oversupply. Clearly, our consumer based economy, which relies on retail sales and consumer spending for a whopping 70% of GDP, is firing on all cylinders.

But what’s up with retail?

Already this year, we have seen more retail bankruptcies then all of 2016.  Payless, J.C. Penney, RadioShack, Macy’s, and Sears have each announced more than 100 store closures. Category killer Target, who opened 58 new stores in 2009, plans just 4 new stores in 2017. Whole Foods, who not so long ago seemed to exemplify success in the age of consciences consumption, is now a takeover target with sales suffering from a lack of store traffic.

So why have headlines for the retail sector been worse than United Airlines passenger re-accommodation practices?

Here are some reasons I have observed (i.e. plagiarized) for the retail apocalypse:

  1. Amazon has upped the online shopping game for all retailers. Consumer Intelligence Research Partners reports that almost one-half of all US households have an Amazon Prime membership.
  2. Multiple national economists report a shift in consumer spending from “things” to “food” (i.e., restaurants). Maybe there is a tech element to this change; which makes a better social media pic, browsing an empty mall, or checking out the latest brewpub with your crew?
  3. Did I mention online shopping? Not only does shopping on your phone keep you out of your local Wal-Mart, but you are also not visiting the store next door to impulsively pick up custom-made cupcakes.

There is no doubt many other factors contribute to such a dynamic shift in the retail sector.  The only thing we are sure of here at NAI Ohio Equities: change is the only constant.

We hope to hear from you if we can help change your real estate strategy for the better…

To read our 2017 First Quarter Market Report, please click here.

Michael Simpson, President

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