Boom in US Retail Real Estate Defies Prediction of Ecommerce Apocalypse - SlashdotBluesky
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Boom in US Retail Real Estate Defies Prediction of Ecommerce Apocalypse (ft.com) 40
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I know what the article claims, but there have been a lot of bankruptcies and closures in the news of late. BigLots is the most recent store to go out of business. They have hundreds of stores across the country and would be considered a mid-range anchor store.
I know Ollie's has bought some of the vacant sites, but they can't absorb all of them. The same with TJ Maxx, Ross, etc. They can't pick up all the open spots.
Then you have restaurants which usually occupy these spaces going out of business as well. Larger chains such as TGI Fridays or Applebees. Replacing them with your standard pizza or chinese joint is not the same thing.
I do find it amusing the article says landlords are raising rents. I can guarantee in six months these same landlords will be telling any existing customers who are up for renewal their rents have to be jacked up because of inflation. The very inflation they created by raising rents in the first place.
Contrary to popular belief, Red Lobster did not go under because of "endless shrimp" or Joe Biden. They went under because an investment firm bought the company, then sold off the properties and made the restaurants pay rent. https://www.nbcnews.com/busine... [nbcnews.com]
Late stage capitalism claims another victim.
Better than empty holes in retail.
Businesses used to own their buildings and they could weather uncertainties. Now they get booted.
Businesses used to own their buildings and they could weather uncertainties. Now they get booted.
You're missing the lesson. Don't sell your business to private equity. If the owners are bowing out and leaving you holding the bag, don't continue working for a company that's being gutted by suit weasels. Quit early and often and change gigs if you work for restaurants and chase the best pay and working conditions. We can also play the capitalism game, if motivated.
You have to have investment capital to play the capitalism game. Otherwise you are a playing piece, and easily sacrificed and replaced.
Plenty of businesses run perfectly fine without "investment capital". They use something mystical called "profits" which get re-input into the business to expand it
The business doesn't exist without someone investing capital.
Is that what you really want though, a bunch of deadwood businesses that are only 'profitable' because they operate rent-free, locking out startups because they don't have a legacy advantage?
In restaurants? You bet. Startups add little or nothing to the restaurant experience, and the few startups that can add to the restaurant experience are all tech startups, not actual restaurant businesses, and the tools they create will be incorporated by existing restaurants over time without needing to replace those restaurants with other restaurants, so turnover benefits no one.
What makes restaurants different from other industries? I'm glad you asked.
Restaurants are inherently limited in the number o
I would be among the first to agree that market economics don't really work when its core assumptions are violated, like
All those factors can be argued different ways. (Is the restaurant scene gaining or losing diversity?) But we do have a way to quantify all those tradeoffs, and that is money. The economics of selling off Red Lobster's assets (namely real estate) to somebody who rents it to somebody builds a Chick-Fila there won't work out unless it makes more customers happy than the Red Lobster did.
Chick-Fil-A does mostly take-out business, so of course it will make a larger number of customers happy. That doesn't mean I want to bring a date there. So it makes more people less happy. You need both kinds of restaurants, but a purely dollar-based model will always optimize for fast food over all else. That's why I don't consider that to be a very good model. You end up like Demolition Man where all restaurants are Taco Bell.
Selling property and leasing it back is also problematic for the people who
This is exactly what was done to Sears. In that case the guy on the board who pushed through the property sales was also the guy who bought the properties and then profited from the rent. I wonder if that's what happened here also.
Lots of near dead retail centers have a church or some sort of school so that they can deny leases to less than desirable businesses.
Lots of retail center loans will put unpaid rent plus fees as added principle to the loans.
Lending banks don't want to classify the retail center loan as nonperforming, in default, take back the property and then declare a loss. Each of which affects how much banking reserve money the bank needs to operate.
Retail rents have been going up for the last few years (we've closed several stores because of it). Not because of scarcity (quite the contrary, because so many retailers have going out of business), but because of how insane commercial real estate (and the mortgages that go with it) is.
How much equity you have to keep in a property depends on how much income you can derive from it. And commercial investors tend to pull out as much equity as they can to buy more property - that's how the business is done. A
This; "Scarcity" and "Vacancy" are completely different issues. A friend closed her business because NNN rent was exceeding ~25% of her gross revenue. Landlord got some other (sucker) in right away to pay that; they will be out of business in a year as they lack the cachet to exceed her revenue.
(Interestingly or not, the landlord was complaining that he isn't making any money either; his ground lease increases were forcing the spike. The reality is we have a bunch of layers sucking money out of the econo
(Interestingly or not, the landlord was complaining that he isn't making any money either; his ground lease increases were forcing the spike. The reality is we have a bunch of layers sucking money out of the economy for doing very little and it is unsustainable.)
Yup. This is why you see big businesses buying property well ahead of when they would need more space, leasing the old offices out to other businesses, and eventually tearing them down to build new buildings that they own. This is why Walmart keeps dumping their leased locations in favor of buildings that they own. This is why ~79% of Target stores are owned by the company, rather than leased (and many of the remaining leased stores are owned, but on leased land).
In the long term, and arguably in the sho
Most dire predictions turn out to be wrong. Ecommerce was supposed to destroy brick-and-mortar stores. Self-driving cars were supposed to destroy Uber and Taxi services and truck driving jobs. Cryptocurrency was supposed to destroy traditional money. AI is now supposed to destroy white-collar jobs.
The truth is usually somewhere between the dire predictions of apocalypse, and the bubbly predictions of promoters.
Part of what caused people to react so negatively to COVID, pretending there was nothing unusual going on, was the alternate narrative that the pandemic WAS as bad as a zombie apocalypse. Both the doomsayers, and the naysayers, went to extremes during the pandemic. What we need, is balance and perspective.
Caused by the Mattress Firms and CBD/Vape/Cannabis shops taking up all the space even if there were 3 other of those shops within site of the new one.
I don't know if they still teach this. But after a few weeks of an introductory economics class, it was clear that macroeconomics was not a hard science.Macroeconomics is often lumped in with the "soft sciences", but it is perhaps more accurately called an irrational science.It's full of untestable theories that become accepted practice due to confirmation bias. A fundamental misunderstanding of reason and logic is necessary for the reader to accept the various popular crackpot hypothesises as a formal theory that could model anything in reality.
Going further into economics, I found that there are a lot of inaccurate models that are useful for purposes of discussion. And economics is also pretty good at identifying some bonehead moves to do with a nation's economy. Which is precisely the moment when leadership tends to ignore the economists.
"Off-price clothing and decor chains Burlington Stores, Ross Stores and TJX, parent of the Marshalls and TJ Maxx store chains, have together added 339 US stores in the past year."
I'd like to see someone dig deeper into WHY these stores are expanding while others are not. I've always understood these brands as liquidators of over stock from OEM's and big box stores which is why the inventory fluctuates constantly. If that's the case, then it makes sense that they're expanding their presence in the absence of the big box stores. Nike needs to sell their polo shirts that were produced and there's only so many they can push through Amazon which is where Ross or TJ fill the gap.
The "Walmart 150 location expansion in the next 5 years" can be credited to the growth of their online sales. There has been rumbles of retailers like Walmart shifting the focus of their large stores from catering to foot traffic to regional fulfillment centers for a last mile carrier (ex: Instacart).
I live in a small midwestern city (in Illinois) and I feel like we have a pretty good representation of your popular retailers and restaurants that reflects sort of a "pulse" of how they're all doing elsewhere.
We have, for example, a shopping mall, that was built decades ago and was once thriving but is now on life support. It still has a JC Penney as an anchor, but the Sears it held onto through around 2017 closed and they got a movie theater to move in, in place of it, a year ago or so. (Meanwhile, the AMC theater that was one community over from us closed down -- which is likely the only reason this particular deal happened.) I'm told this mall can't even attract the "pop up" type shops around the holidays that many do, because they didn't build it with enough space to keep inventory in the backs of its shops. People wanting to do a temporary store often had to lease 2 spaces, just to use one to hold their inventory.
One of our nicer "plazas" of shops just recently got an expensive facelift, but Big Lots was one of the retailers in there who just announced their closure, right after they gave them a whole new sign and front entrance. The stand-alone Office Depot near it closed down earlier this year and is sitting empty, barring Spirit Halloween doing their thing in it, in October.
I could go on listing specifics... but my overall sense is that sure, places aren't all just closing down and leaving empty buildings behind indefinitely. But you don't generally see a new business move in unless it's filling in for something similar that already failed. We have several stores that were in our mall for many years, who all moved out of there and into separate stand-alone properties. So again, that might look good to the guy who leases out spaces in his strip mall. But it's just a reshuffling of what's already here.
It's also a little worrisome when you look at the ones still in business and realize how many of those are chains that are struggling. (We have a Red Lobster, for example -- which isn't a great bet to be around in the next 5 years.)
The big problem is that there are entire categories of businesses that basically no longer exist now, or exist only as pale shadows of their previous glory.
For example, ten years ago, we had Fry's Electronics. Now, the closest thing you can find is Best Buy, which is like comparing a super-sized 7-11 to a Meijer. Between the loss of Fry's and Radio Shack, doing anything with electronics components these days involves ordering stuff online days or weeks ahead of time, which is a royal PITA.
I guess Micro Ce
Agree on things like Fry's going away and being left with mediocre replacements like Best Buy. But I remember a LOT of people trying to do the retail electronics "big box" sales and all failing, one after another. We used to have Tipton, Service Merchandise, Circuit City, HH Gregg ... not to mention the computer mega-stores like Computer City and CompUSA or Egghead Software back in the day. Now, our Best Buy stores are closing one after another, too.
I have a Micro Center near me, and it seems to be standing
...a commercial property broker. "They would say, 'Retail is overbuilt. Retail is struggling. Ecommerce is going to take over brick-and-mortar retail.' And really none of that has ended up to be true,"
Yes it has, Mr. Real Estate Promoter. There are empty malls and storefronts (and office buildings) all over North America...where they haven't been torn down completely. Meanwhile Amazon, UPS, FedEx and the poor USPS crowd the streets and you can barely get to WalMart to slot yourself in among the shopping
Amazon is destroying online commerce by flooding the market with Chinese junk. Eventually, you realize you need to go to the store and hold the thing in your hand, when you can't get enough info about it online. They frequently don't even tell you the dimensions or the weight of the item, for example.
Walts Carwash and ZZZ Accounting. Empty stores in stripmalls paying huge rents. Read between the lines.
What's going on right behind the curtain?
It's like a big joke at our expense.
So you think having lots of vacancies because nobody is in them making money is a GOOD THING?!?!?
Also are you building new places to rent (one way I can read that headline), or are you renting more than you had for a similar time period? Please be specific with your words. Or just stop posting clickbait /. ? (as if)
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