Retail Real Estate: Clean Up in Aisle Six, or Heading to Chapter-7?

“First, there were books, then music and video…Now is placing its bets on the fledgling grocery business.”

—The New York Times, May 19, 1999

February 18, 2018

With Amazon’s recent acquisition of Whole Foods and the near-daily announcements of store closings, much has been written about the death of retail. Perhaps too much. After all, US consumers touch retail daily. The newsstand, coffee shop, lunch spot, supermarket, drug store, dry cleaner, fitness center, movie theater, take-out dinner place and frozen yogurt bar all occupy retail-oriented real estate. Chances are that unless one falls within a narrow demographic and geographic segment, most of what is worn or eaten comes via brick and mortar locations. And given that people are likely to continue getting dressed and eating every day, demand for retail will persist.

Will evolving consumer shopping patterns impact retail-oriented real estate? Of course. Just as malls took retailers from Main Street in the 1970s and category-killer power centers took shoppers away from malls in the 1990s, the Internet has transformed the way the world shops. The issue that investors will address over the coming decade is the extent to which these changes in buyer behavior result in obsolescence or opportunity.

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