Commercial Real Estate Rebounds With New Appetite For Retail
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Demand for commercial real estate is resurging, with a special focus on retail.
A year of major retail restructuring appears to have unleashed a huge new appetite for commercial real estate "CRE" investments, in particular retail property. Not only is this being seen among individual investors, but also among the biggest and well capitalized corporations in the world. They both experienced a similar setback by the stock market and cryptocurrency in early 2018, which turned their focus to CRE.
Big Tech Goes Big in Real Estate
Further proof that technology is not at odds with the world of brick and mortar business is showing up with some of the biggest tech firms becoming some of the biggest investors in commercial real estate. Amazon has been working to expand its physical real estate footprint with a new headquarters and larger Whole Foods stores. Airbnb and WeWork have begun collaborating to give tech workers and business travellers access to both temporary housing and workspace.
Google has emerged as one of the most significant property investors, adding a new $2.4B commercial building to its diverse portfolio in the last couple of months. Google has now proven to be willing to set new records in price per square foot, and sales prices, as it eats up real estate with its $14B plus and growing property arm.
Ousted Uber executive Travis Kalanick has also announced his next move into real estate investment. Making a substantial personal investment of $150M, Travis has thrown his hat in the ring to repurpose commercial and retail centers for use by for modern retailers, and those needing more local warehouse and distribution coverage.
A New Appreciation for Brick & Mortar Retail
While Walmart is dealing with accusations that it falsely exaggerated web based sales figures, others are seizing the opportunity to grab retail properties at attractive properties. The Wall Street Journal reports more retailers are looking to buy out their own buildings. Even Toys "R" Us appears it may be saved as a billionaire toy maker offers to put up $200M to save it.
Canadian retailer Simons is one of those who has been expanding with new stores, and has found an edge in making its locations greener and more energy efficient.
In fact, the more technology that comes out, and the more we spend the rest of our lives online, the more people are craving in-person interaction and shopping experience, and the more efficient and profitable brick and mortar retail is becoming.
A new rush for commercial real estate, and especially retail property appears to be on. Those with the capital are seeing bargains in the market, as well as new innovative ways to increase the profitability of these properties. Retail may be changing, but it all appears to be good news for innovative stores, consumers, smart re-developers, and investors.