Asset Classes

Retail Real Estate

Retail Real Estate

Retail Space
Real Estate

Retail Real Estate is Retail Estate used for stores, shopping malls and other forms of commerce.

More About Retail Real Estate

  • Few retailers own their own real estate - most lease it from landlords
    • Lease payments are taxa deductible (vs long-term owning gains)
    • Leasing offers more flexibility to shut down stores or move
    • Leasing requires less upfront capital investment
  • Key metrics include:
    • Sales per square foot --> drives revenue
  • Retail buildings are typically financed with 3-10 year loans that have a balloon payment
    • It's norally easy to refinance as real estate values increase

US has an overabundance of retail real estate (2018)

  • 27M square feet went vacant in 2017 with more expected in 2018
  • Vacant spaces have been filling up with non-retail uses (churches, gyms, childrens activites, etc)