Why Brick and Mortar Retail is Still a Worthy Commercial Real Estate Investment
Over the past decade, online shopping has become somewhat of a norm for the average consumer. However, the convenience of online shopping hasn’t managed to wipe out the demand for brick and mortar retail space. That’s why real estate investment across Canada is changing according to consumer patterns, giving potential investors like yourself a lot to think about before investing in brick and mortar retail spaces.
It’s important to remember, though, that deciding whether to invest in commercial real estate today is not a matter of whether retail spaces are superior to, or beneath online retail. Rather, real estate investment advisors encourage potential investors to look at how the success of online shopping naturally shapes the dynamics and decisions made in retail real estate.
There are a number of main trends found when comparing brick and mortar to online retail, and each contribute to the changing landscape of retail real estate investments.
There is Value in Touching and Seeing
In a Google survey inquiring why in-person shopping is preferred, over 60% of consumers state that the ability to see, feel and test out a product is important. This is especially prominent among women, the primary consumers for most families. The ability to return something without having to mail it, and being assisted and guided by sales associates in store were minor alternative benefits of the in store experience.
It’s also essential to factor in the biggest shopping holidays in Canada. For instance, Black Friday allows shoppers to see exactly what they’re buying, but is the crowded, sometimes dangerous mob environment worth this perk of brick and mortar? One way to determine this is by comparing Black Friday success to that of an equivalent shopping day in the online world.
The Demand for Instant Gratification
Yet another reason why brick and mortar retail has not died is because of the need for instant return. In the same consumer Google survey, roughly 50% of participants responded that they valued the ability to take home what they buy right away. This percentage is even higher among respondents aged 18-24 with over 60% of this cohort valuing the immediate take-home aspect that real estate investment allows. Although the biggest online shopping day, Cyber Monday, does not allow instant gratification, it has still had higher success rates some years because of the convenience of avoiding crowds. Clearly, there are pros and cons to both online and in store retail.
Location, Location, Location
Consumer behaviour also shows patterns when comparing rural to urban areas. This cohort determines an even more defined pattern with in store preferences. The ability to see in person sits at just above 70% for rural consumers vs about 60 % for suburban and just over 60% for urban consumers.
Rural consumers view shopping trips as an event that often takes time. Given the distance, they tend to hold the in-store experience in high value. Making the trip means needing to ensure the product is what it claims to be online. Therefore even in rural areas, brick and mortar retail investment finds a way to hold an advantage.
Overall, the brick and mortar model is not dying, it’s merely adjusting. There is convenience in properly constructed plaza and neighbouring store connection. Making shops part of a community is an advantage that online retail can never touch.
How Real Estate Investment Advisors Help
It’s been established that investing in commercial real estate can provide highly profitable returns, but would you know how and where to look on your own? With the help of real estate investment advisors, you can easily locate, purchase, and manage the most lucrative retail investment properties in Calgary. Our investment advisors at ReDev can ensure that you invest in retail real estate that’s located in areas with high foot traffic, mingled with national tenants, and poses opportunities to maximize current investment potential set against future growth.
Take advantage of the growing retail scene in Calgary! Work with our real estate investment advisors to learn how you can maximize gains in the city’s busiest commercial districts. Call us at 416-225-5700 today.