What's Trending in Real Estate, October 2022
Retail Real Estate Said To Be Enjoying Its Biggest Revival in Years
Things are looking up for retail real estate. Yes, in the midst of an inflationary environment with a predicted recession on the horizon, it’s a good time to be in retail real estate—at least in some sectors, according to a recent article in the Wall Street Journal. Here are a few numbers from the article:
- In Q2, the U.S. retail vacancy rate fell to 6.1%, its lowest level in 15 years; asking rents for U.S shopping centers were 16% higher than 5 years ago, according to Cushman & Wakefield.
- To attract more customers, online-only retailers are moving into brick-and-mortar locations, boosting competition (as well as rents) for choice real estate.
- Not so good news for office space as the shift to working from home and hybrid employment models continues. The current glut of office space is good news for those searching for spaces in that sector.
The article also reports on the state of malls, store openings and closings, retail construction, online sales, and current trends in commercial real estate.
Regional Mall Operators Are in a Bind
However (and on the other hand, as economists say), just one week later, an article by the same writer in the same publication chronicled the struggles of a regional mall operator in Massachusetts—as a lead-in to a deeper look at how regional mall operators “are in a bind.” Citing Nick Egelanian, president of retail advisory firm SiteWorks, which tracks U.S. mall performance, the total number of U.S. malls has declined from an estimated 2,500 in the 1980s to about 700 today. Yes, really, and for a combination of multiple factors further detailed in the WSJ article. That’s 1,800 fewer malls over the past 40 or so years.
Restaurant Operators Face a Tight Real Estate Market
With top sites in short supply and costs rising for both leased and new construction, restaurant franchisees are innovating, adapting, flexing, and looking for new strategies for growth and expansion, as highlighted in a recent article in Nation’s Restaurant News. In the world of restaurant real estate world, putting new wine (brands) in old bottles (sites) is proving an effective strategy. And, of course, the hockey stick rise in off-premise dining has resulted in smaller footprints and a flurry of new prototypes with smaller dining areas, takeout service, drive-thrus, and other adaptations to pre-Covid models. Then there are rising construction costs, longer times to opening, and negotiating with landlords. For more on these changes, see the full article here.
Hurricane Ian Was So Devastating Even Waffle House Closed
Waffle House’s famed reputation for remaining open when everyone else shuts because of natural or other disasters, took a hit from Hurricane Ian and its 155-mph winds late last month—as did a large swath of Florida. “At the height of the storm, we had nearly 40 restaurants closed because they either were in the direct path of Hurricane Ian or were in low-lying, flood-prone areas,” Njeri Boss, VP of public relations for Waffle House, told Nation’s Restaurant News. For more on how the storm affected restaurants in the path of the hurricane, find the article here. For more on Hurricane Ian’s effect on commercial real estate, see this article from Trepp called “Hurricane Ian Makes Landfall: Mapping the Commercial Real Estate Exposure.”
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