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