Boom in US Retail Real Estate Defies Prediction of Ecommerce Apocalypse (ft.com)
- Reference: 0175774135
- News link: https://slashdot.org/story/24/12/27/1338252/boom-in-us-retail-real-estate-defies-prediction-of-ecommerce-apocalypse
- Source link: https://www.ft.com/content/dd845d85-12a6-42bd-92e2-27b9d1070232
[2]non-paywalled source
, defying forecasts of a retail apocalypse caused by the rise of ecommerce. From a report:> Landlords of complexes anchored by big-box chains, discount merchants and supermarkets have gained power to raise rents as leases expire. New construction has been stymied by higher interest rates and soaring building costs.
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> Scarcity in the market had disproved long-standing beliefs about retail real estate, said Brandon Isner, head of retail research at Newmark, a commercial property broker. "They would say, 'Retail is overbuilt. Retail is struggling. Ecommerce is going to take over brick-and-mortar retail.' And really none of that has ended up to be true," Isner said. Retailers plan to expand further in the years ahead, led by discount chains favoured by inflation-weary consumers seeking deals. Off-price clothing and decor chains Burlington Stores, Ross Stores and TJX, parent of the Marshalls and TJ Maxx store chains, have together added 339 US stores in the past year. Walmart intends to add 150 US locations over the next five years.
[1] https://www.ft.com/content/dd845d85-12a6-42bd-92e2-27b9d1070232
[2] https://www.pymnts.com/news/retail/2024/open-air-mall-vacancies-hit-lowest-level-record/
A lot of recent backruptcies (Score:3)
I know what the article claims, but there have been a lot of bankruptcies and closures in the news of late. BigLots is the most recent store to go out of business. They have hundreds of stores across the country and would be considered a mid-range anchor store.
I know Ollie's has bought some of the vacant sites, but they can't absorb all of them. The same with TJ Maxx, Ross, etc. They can't pick up all the open spots.
Then you have restaurants which usually occupy these spaces going out of business as well. Larger chains such as TGI Fridays or Applebees. Replacing them with your standard pizza or chinese joint is not the same thing.
I do find it amusing the article says landlords are raising rents. I can guarantee in six months these same landlords will be telling any existing customers who are up for renewal their rents have to be jacked up because of inflation. The very inflation they created by raising rents in the first place.
Re: (Score:3)
Contrary to popular belief, Red Lobster did not go under because of "endless shrimp" or Joe Biden. They went under because an investment firm bought the company, then sold off the properties and made the restaurants pay rent. [1]https://www.nbcnews.com/busine... [nbcnews.com]
Late stage capitalism claims another victim.
[1] https://www.nbcnews.com/business/consumer/private-equity-rolled-red-lobster-rcna153397
Re: (Score:2)
Is that what you really want though, a bunch of deadwood businesses that are only 'profitable' because they operate rent-free, locking out startups because they don't have a legacy advantage? It's a business, not a human being. If it's worth less than the land it's on, then it's time to knock it down and repurpose the space more productively.
Re: (Score:3)
Retail rents have been going up for the last few years (we've closed several stores because of it). Not because of scarcity (quite the contrary, because so many retailers have going out of business), but because of how insane commercial real estate (and the mortgages that go with it) is.
How much equity you have to keep in a property depends on how much income you can derive from it. And commercial investors tend to pull out as much equity as they can to buy more property - that's how the business is done. A
Predictions of apocalypse (Score:3)
Most dire predictions turn out to be wrong. Ecommerce was supposed to destroy brick-and-mortar stores. Self-driving cars were supposed to destroy Uber and Taxi services and truck driving jobs. Cryptocurrency was supposed to destroy traditional money. AI is now supposed to destroy white-collar jobs.
The truth is usually somewhere between the dire predictions of apocalypse, and the bubbly predictions of promoters.
Re: (Score:2)
Eh, people like dramatic narratives for quick reads. Though I think the bigger problem is that our idea of 'apocalyptic' has scaled by TV over the years. Just look at the pandemic.. for a lot of people if it doesn't rise to the level of zombie apocalypse like they see on TV then it isn't a big deal. Millions of deaths are not as dramatically visible as abandoned towns where 99% of people are gone, but now that is what a 'real' health disaster is supposed to look like.
Statistical anomaly (Score:2)
Caused by the Mattress Firms and CBD/Vape/Cannabis shops taking up all the space even if there were 3 other of those shops within site of the new one.
the first thing you learn in economics (Score:2)
I don't know if they still teach this. But after a few weeks of an introductory economics class, it was clear that macroeconomics was not a hard science.
Macroeconomics is often lumped in with the "soft sciences", but it is perhaps more accurately called an irrational science.
It's full of untestable theories that become accepted practice due to confirmation bias. A fundamental misunderstanding of reason and logic is necessary for the reader to accept the various popular crackpot hypothesises as a formal theo
Re: (Score:2)
Thus the problem with 'introductory' classes. Economics is all about reason and logic, BUT you actually have to look at actual reason and logic, not armchair stuff that 'sounds sensible'. Economics is very rational, the problem is that when laymen hear the word 'rational' they picture some simple single variable that all rational people (like they picture themselves being) should be optimizing for.. instead the field acknowledges that there are wide range of priorities and optimizations the impact be
Devil is in the details (Score:2)
"Off-price clothing and decor chains Burlington Stores, Ross Stores and TJX, parent of the Marshalls and TJ Maxx store chains, have together added 339 US stores in the past year."
I'd like to see someone dig deeper into WHY these stores are expanding while others are not. I've always understood these brands as liquidators of over stock from OEM's and big box stores which is why the inventory fluctuates constantly. If that's the case, then it makes sense that they're expanding their presence in the absence
This feels heavily biased to me (Score:2)
I live in a small midwestern city (in Illinois) and I feel like we have a pretty good representation of your popular retailers and restaurants that reflects sort of a "pulse" of how they're all doing elsewhere.
We have, for example, a shopping mall, that was built decades ago and was once thriving but is now on life support. It still has a JC Penney as an anchor, but the Sears it held onto through around 2017 closed and they got a movie theater to move in, in place of it, a year ago or so. (Meanwhile, the AM
Cough BS cough (Score:1)
...a commercial property broker. "They would say, 'Retail is overbuilt. Retail is struggling. Ecommerce is going to take over brick-and-mortar retail.' And really none of that has ended up to be true,"
Yes it has, Mr. Real Estate Promoter. There are empty malls and storefronts (and office buildings) all over North America...where they haven't been torn down completely. Meanwhile Amazon, UPS, FedEx and the poor USPS crowd the streets and you can barely get to WalMart to slot yourself in among the shopping
The Argos and Bargain Shop shop model (Score:2)
This is mostly a British thing, but being able to get common household items without waiting for the internet to deliver or paying delivery fees is one of the reasons why these kind of shops survive. While the original Woolworth's that was the prime example of such places is no longer around, the spiritual successors B&M and Home Bargains are doing well, and Argos has survived the internet by integrating themselves with the supermarket Sainsbury's.
self inflicted (Score:2)
Amazon is destroying online commerce by flooding the market with Chinese junk. Eventually, you realize you need to go to the store and hold the thing in your hand, when you can't get enough info about it online. They frequently don't even tell you the dimensions or the weight of the item, for example.
Potentially unexpected AI response (Score:2)
It's already annoying to buy a lot of items online only to get the wrong item or something entirely unlike its description. Clothing is especially this way. But the more things online are produced by AI, the more people will realize the only way to have real interactions is face to face. I wouldn't be surprised if malls make a bit of a recovery because people will drop online activity once they realize it's 99% AI and they will crave in person socialization once more.