The online e-commerce shopping boom sure has put a dent in retail and commercial real estate space as a whole, but is the damage getting worse or can industrial real estate bounce back and remain solid? The next downturn in CRE will be catalyzed initially by a stagnant economy and low growth, followed by multiple years of mild-to-escalating recession, credit re-rating, and demand for higher risk premiums by capital providers. Income growth will slow or go negative in the medium term, cap-rate compression will cease, and finding new tenants will be very difficult. With this happening, we will also witness aging demographics and subtle changes of consumption baskets and lifestyle, that revolutionize the format of office and retail.
It seems these days, there are growing numbers of supply chain disruptors. From erratic thunderstorms to tornadoes, hurricanes and droughts; natural disasters still pose the greatest threat to retail disruption. As these uncontrollable events happen, we feel the effects throughout the economy which directly translates to retail.
A little over a decade ago, brick and mortar retail space was the hottest market, with investors and users alike scratching and clawing their way into bidding wars for the elusive corner locations or store fronts on major highways.