Reports of the death of the store were greatly exaggerated.
KEY TAKEAWAYS
- Nearly a decade ago, the outlook for shopping centers could not have looked worse. But reports of the death of the store were greatly exaggerated
- The U.S. consumer never lost their penchant for shopping as the economy continued to grow. And shopping center occupancy rates continued to climb as barely any new construction was added.
- Strong demand is meeting very limited supply for highly occupied shopping centers strategically located in high-growth, high-income markets, anchored by leading retailers.
Transcript:
Remember the Retail Apocalypse?
Nearly a decade ago, the outlook for shopping centers could not have looked worse.
But reports of the death of the store were greatly exaggerated.
The U.S. consumer never lost their penchant for shopping as the economy continued to grow.
And shopping center occupancy rates continued to climb as barely any new construction was added.
Meanwhile, what did not kill the most adaptable and well-managed retailers made them stronger.
They didn’t just survive the apocalypse. They adapted.
They are thriving in vibrant, growing communities.
Grocery stores, the largest component of brick-and-mortar retail, have proven to be irreplaceable by warehouse distribution.
Omni-channel retailing with physical stores supporting online order fulfillment is the new reality.
Beauty services, fitness centers, medical services, restaurants and coffee shops are almost internet proof.
The recovery in the metrics on the ground do not lie.
Open-air shopping centers are the only major property type with accelerating rental rate growth.
Shopping centers are the most highly occupied of any major commercial property type.
A resurgence in new retail construction is a long way off.
The result?
Guided by our insights at the intersection of listed and private real estate, we believe that markets have yet to fully recognize this dynamic.
We believe, prices for open-air, necessity driven shopping centers have bottomed.
Strong demand is meeting very limited supply for highly occupied shopping centers strategically located in high-growth, high-income markets, anchored by leading retailers.
The Retail Renaissance has arrived.
FURTHER READING
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The Real Estate Reel: Drivers of commercial real estate returns in 2025
A look back. The potential drivers of commercial real estate returns in 2025. And a look forward.
The Real Estate Reel: How institutions are invested in real estate headed into 2025
More investors are allocating to REITs, as listed and private real estate repriced and more investors seek liquidity.
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