• Paper examines news headlines about the retail sector
• Adaptive asset managers and retailers cater to consumer preferences and behavior
• Online retail sales cannot fully replace consumers’ desire to shop in a physical store
• High-performing retail centers with an experiential component, are a buying opportunity
October 31, 2017 – In its latest research report, “THINK US Retail: De-cluttering the retail landscape” TH Real Estate examines the negative news headlines about the retail sector and the forces shaping the retail industry, looking ahead to where investment opportunities lie in the future.
“Doomsday scenarios cited in news coverage are extrapolated to the entire industry, rather than to the vulnerable segments which are truly struggling,” says Melissa Reagen, Americas Research Head, TH Real Estate. “In our view, the average-to-low-performing retail centers are seeing value declines, while there is no evidence of the same for high-performing malls and shopping centers.”
TH Real Estate’s report encourages consideration of how physical stores drive online sales, the performance of A-rated malls apart from B and C-rated malls and the net gain in store openings in 2017.
“The market is being de-cluttered via natural selection,” said John Ragland, TH Real Estate’s US Head of Retail. “E-commerce and technology are causing significant changes in retailers’ business models and weak retailers are being pushed out of business faster than ever before. The end result will be a set of financially healthier retailers and shopping centers that offer customers more compelling products and curated experiences. Ultimately, we believe this disruption is causing opportunities on which savvy investors can capitalize.”
“Defining characteristics of high-performing retail assets are a strong experiential component, continual adaptions that complement e-commerce, and strategic, forward-looking capital improvements that address shifts in consumer behavior and adapt to current technology,” added Reagen.
While the rise of online retail sales and continuing shifts in consumer behavior will continue to impact the US retail market, the report concludes that high-performing retail centers with an experiential component are a buying opportunity. While online retail sales have provided consumers with an easier and more efficient way to shop, e-commerce cannot replace the consumers’ desire to shop in a physical store. For more information, read the report.
About TH Real Estate
TH Real Estate, an affiliate of Nuveen (the investment management arm of TIAA), is one of the largest real estate investment managers in the world with $103bn in AUM. Managing a suite of funds and mandates spanning both debt and equity across diverse geographies, sectors, investment styles and vehicle types, we provide access to every aspect of real estate investing. With over 80 years of investing experience, and more than 530 real estate professionals located across 22 cities throughout the US, Europe and Asia-Pacific, the platform offers unparalleled geographic reach, which is married with deep sector expertise.
Our investment, asset management and corporate strategies grow from a deep understanding of the structural trends that we believe will shape the future of real estate and responsible investing beyond market cycles. This ‘Tomorrow’s World’ approach sits at the core of our investment process and business operations, informing our long-term view of real estate investments for the enduring benefit of both clients and society.
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