Recently I came across the following headline in a popular real estsate industry newsletter, GlobeStreet:
“THIS IS HOW BAD RETAIL AND OFFICE VALUATION DROPS HAVE GOTTEN”
Once again headlines and clickbait are painting retail real estate with a broad negative and provocative brush. The article goes on to mention among other “facts” that major retail assets were down 57%. 57% ??? 🤔 I do not know about you but in my current real estate advisory practice I have not seen anything like that for any of the shopping centers I work on. Most properties and retail portfolios are holding their value or seeing modest decreases.  In fact, recent industry sources have noted nationwide shopping center occupancy at a 20 year high of 95-96%. In many markets rents continue to escalate at high single and low double digit rates.
So I dug in a bit. The article quoted a report from CRED iQ (a commercial real estate data service). So I went to their website and read the original summary of their study. While a complete report was not readily available they showed a chart with 17 properties that had material drops in value(the quoted 57%). On that chart, 10 of the 17 assets were retail(the other 7 were office assets). However, 100% – ALL– of them were enclosed regional malls. So, what is the real story ? Is it the overeblown “retail appocalype” reported at the beginning of the pandemic ? Are retail or shopping centers broadly in touble ? Perhaps it is the continuing story that began over a decade ago of the slow death of the bad and mediocre mall in America. It is certain that the retail industry broadly and retail real estate has its challenges. Everything from the growth of on-line shopping (stabilized now in the 15-18% range of all retail sales) and the slow death of overbuilt and obsolete enclosed malls present obstacles. However, in-person experiences, opportunities for brands to make real visceral connections with customers and our human nature need to engage with people all spell a bright future for retail and shopping centers.