Commercial real estate has been a volatile industry for a while now. But it’s been experiencing uncharacteristically dramatic shifts in certain sub-sectors the past year or so. If commercial real estate professionals don’t make adjustments, they could potentially lose significant investments.
Take retail, for example.
The United States is poised to lose 80,000 retail stores by 2026, according to a report from UBS. What does this mean for commercial real estate professionals and how should they react to it? Let’s discuss.
Retail CRE Statistics
As mentioned above, the U.S. is set to lose a significant amount of retail stores in the near future. Here are some other retail-related commercial real estate statistics to keep in mind as you prepare for adjustments:
- 30 major retailers filed for bankruptcy in 2020 (Source: Retail Dive)
- While 80,000 is the estimate, there could be as many as 150,000 retail stores closing by 2026 (Source: UBS)
- Online retail’s market share of the full retail landscape climbed from 14% in 2019 to 18% in 2020 (Source: Yahoo)
- Average household online spending increased from $5,800 in 2019 to $7,100 in 2020. (Source: Bureau of Labor Statistics)
Adjusting for the Future
Why are these changes happening? The two biggest reasons are undoubtedly the global pandemic and the shift from physical to digital retail presences. The former has caused all sorts of market fluctuations and forced people to make more purchases online, due to social distancing and government guidelines. The latter has been a progression going on for years, but was escalated significantly by COVID-19. Either way, CRE pros may need to make adjustments to keep their portfolio intact.
Choosing the Right Tool
Not keeping all of your eggs in the retail basket is one way to avoid a potential portfolio disaster in the future. This diversification doesn’t mean you should exclusively abandon the retail sector. Instead, make sure you’re utilizing the right CRE tool to organize, monitor and evaluate any property with potential. Who knows, the experts could be wrong and this could just be a short decline in retail that you take advantage of to give your portfolio a boost. The right tool will help you by making market analysis, forecasting and adjustments easier than ever.
If you need help navigating the decline in retail and could use a CRE tool that will help, request a demo of Quarem today.