It’s clear the retail world is changing. Some sectors and properties are doing extremely well, while others, even major international multi-billion dollar companies, have proven they aren’t immune to market changes and poor planning.
Throughout North America there is plenty of media coverage warning about clearing out the middle-class. The rich are getting a lot richer, thanks in part to their real estate investments. While the other half is being pushed out of homeownership and quickly realizing that their finances are getting tighter and tighter. This will certainly have an effect on retail and consumer spending, and suggests that more action needs to be seen at the top and bottom ends of the market.
In leaner times we see discount stores flourishing. When times are good, home equity is buoyant and incomes are strong. We also see artisanal and gourmet good suppliers popping up in mass and high end fashion stores packed. Those retail properties that cater to both ends of the market could do very well in the times ahead.
We are also increasingly seeing technology benefiting brick and mortar retailers among those that are using it. If anything, a more digital world is actually driving more desire and placing more value on real world experiences.
For example, Apple actually started requiring its digital watch purchasers to visit a store for an appointment first. Bass Pro Shops offers a very hands-on experience for the whole family. There are giant aquariums to entertain children, ATVs and boats that customers can experience, all while exploring various events and attractions.
Many shopping plazas may also house inexpensive restaurants, beauty salons, grocery stores and other basic necessities that will be frequented regardless of the economy. Like real estate itself, many of these products are always needed and accounted for in people’s monthly budget.
It is important to stay abreast of the current trends when looking for retail property investments that will continue to provide you with consistent income and equity appreciation for years to come.