The latest results from NREI’s exclusive retail real estate survey reveal that retail operators, investors and developers continue to tread carefully in a market that is fraught with challenges. Yet despite those challenges, the majority of respondents are maintaining a positive outlook for the coming year with expectations for stable and improving fundamentals, good access to capital and favorable views of retail as an attractive asset.
When asked to name their biggest concerns for the retail sector in the next 12 to 24 months, respondents to the second quarter survey replied with a litany of different responses. Increased competition from Amazon and other online retailers topped the list. Respondents also cited issues such as the reduction in the size and number of stores by larger retailers, a slow-down in a still fragile economy and changing consumer behavior. Some respondents voiced worries about overbuilding in the restaurant sector specifically, as well as a general saturation of retail across all categories. “I don’t have a lot of confidence in retailers. People are buying merchandise, but they are looking for bargains. People are not buying at full price and the retailers are recognizing that in their margins,” wrote one respondent.
In July, NREI emailed commercial real estate professionals requesting participation in an online survey about retail real estate. Overall, the survey received 335 responses, half of whom identified as Owner/Partner/President/Chairman/CEO/CFO. In addition, 46 percent operate in the East, 46 percent in the South, 40 percent in the West and 36 percent in the Midwest. (Respondents could select all regions that applied.)