Asset Classes

Retail Real Estate

Retail Space
Parent Asset Class

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)