2018 Commercial Real Estate – A Retail Revolution? | Worth CRE


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2018 Commercial Real Estate – A Retail Revolution?

The retail world has been going through significant changes over the past few years with many now believing that brick and mortar commercial real estate is losing the battle. Yet upon closer look, the reports are conflicting as to what is actually going on with regards to retail business property for sale and whether this is still a worthwhile investment.

If you are a retail space owner or interested in investing in this type of real estate, it is not all doom and gloom for business property in 2018 as being touted by many reports.  You just need to embrace the changes and grow with them.

Is Ecommerce Really Taking Over?

Depending on the source, the answer as to whether ecommerce is taking over can be both yes - and no. In reality, the numbers suggest something unexpected and perplexing. The 2nd quarter 2017 Census report indicates that of the $1.2 billion reported in retail sales, online purchases totaled less than 9% of this.

Ecommerce sales have been growing by approximately 16% each year in recent years. This may account for some of the reduced demand for business property; however, there is still more to this story.

While business closings have made the news, with commercial real estate investors questioning whether retail buildings are still a good investment, 2017 actually saw more openings than closings. While it does seem there may be some type of shift occurring, the picture is not necessarily as dismal for business property for sale as many make it out to be.

An Overabundance of Retail Space - Now What?

Other than the slow rise of ecommerce, one of the other factors attributing to the slowdown happening in retail is a current overabundance of retail space - a result of a retail building boom that has come to an end.

A better economy does increase the demand for more retail business property. Yet it is possible that developers overestimated demand over the past few years and did not consider how ecommerce could affect it.

Fortunately, this still does not have to mean closures or empty retail space. Landlords and retail property owners must simply get creative to get over this hump.

How Can Business Property Owners Stay Profitable?

Survival in a shifting commercial real estate market requires creativity and flexibility. Rather than leaving spaces empty or putting retail business property for sale, smart landlords are catering to a wider demand for space.

Repurposing is on the rise, as is converting retail space to restaurant space - a trend that seems to be working very well in some markets. Unused space in malls and shopping centers is becoming more in demand for other types of businesses who want these locations and will lease if the rent is affordable.

If you are a current retail investor and trying to stay ahead of competitors, you must provide shoppers with an experience worth leaving the house. Good products, a good selection, a clean and upbeat atmosphere along with interested and helpful staff are all essential.

Stores that offer in-store pickup for online purchases can also win by using this as a way to keep drawing people into the physical location.

While the retail world is going through certain changes, if you are an owner of business property or considering an investment in business property for sale, now is not the time to give up if you are willing to flex with these changes. There is always a use for retail commercial real estate, even if it is not what a space was initially intended to be.

The goal in these changing times must simply be to get spaces leased so they remain profitable. If you are a current property owner or are ready to invest in commercial real estate, you can achieve this goal in 2018 with a little creativity, attention to customer needs, and a willingness to work with other businesses!

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