Retail Leads Commercial Real Estate Interest In 2014
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Retail continues to stand out as the most in demand commercial real estate sector for investment in 2014. So who's involved and why is retail property so attractive?
Retail wars continue to heat up. As battles for consumer dollars go head to head, floor space has increased in demand and investors are becoming increasingly bullish on the sector.
Both the industrial and office sectors continue to try and find the balance between supply and demand and figure out where trends are headed and how regulations will impact their growth. This is especially true in Canada, and perhaps even more so in Alberta.
Condo and multi-family building is booming. It's become more favoured in the U.S., but cities such as Edmonton are seeing building permits and new developments increase significantly due to the need for space and the anticipation of more renters.
The demand for retail property investments and yields has grown dramatically over the last few months. This has sparked a surge in retail REITs being spun off by major firms, such as the Simon Property Group. Simon is spinning off its smaller shopping centers and strip malls into a REIT, while American Realty is spinning off a $2.2 billion publicly traded shopping center REIT after tripling its portfolio.
Much of this new gold rush comes on the heels of the realization that technology is bolstering brick and mortar retail sales and property values, rather than driving customers online.
One of the biggest pivot points was online retail promoter Shopify revealing new offline trends, and pledging its latest $100 million round of funding for offline mediums.
Google has finally decided to jump on the bandwagon too, scooping up new digs in Canada, and venturing into the retail market to join Apple.
Warren Buffett has done his fair share of creating buzz after the release of the latest Berkshire Hathaway performance results. Some of the legend's most notable moves were in Canadian energy and multiple real estate/retail ventures.
In Edmonton, the start of the arena construction has also spurred increased interest in both residential and retail real estate in the city. This may increase the value of current properties, which already have near zero vacancy rates.