Retail’s recent transformations in brick-and-mortar has investors watching closely

Wednesday, May 17, 2023

Retail has changed, innovated and adapted new trends in a post-covid environment. Retail owners and operators in the industry are seeing flying colors – and investors are taking note. 

According to Michael Fitzgerald, Executive Director and Head of US Retail Investments at W. P. Carey, there are three major trends stakeholders should be watching: 

  1. The strength of needs-based retail (this is where brick-and-mortar serves as a key player)
  2. A development switch favoring sale-leaseback investors 
  3. The continued recalibration of buyer-seller expectations (buyers continuously going back to physical stores)

“An interesting thing about COVID was how resilient certain areas of retail actually were. We saw immediate and sustained growth after that short period of shutdowns,” said Fitzgerald.

Core-good retailers, low-cost discount stores and family-focused entertainment shopping centers have been “very strong” says Fitzgerald. Retail footprint is an important factor in these numbers, proving that brick-and-mortar markets are the key to overall success. 

“When you’re very flexible, have tons of ability to evaluate business models, take a partnership approach and meet with management teams to understand how they position themselves in the market, you’ll have a lot of good investment options,” said Fitzgerald, who prefers master leases of 15- to 25-year term with escalations every five years. “We can do anything from convenience stores to an automotive service business to grocery and sporting goods. We’re pretty agnostic as to the types of retail we pursue.”

While it’s still early for a full prediction of the overall volume of the retail sector, all signs point to a successful year for the industry and a good opportunity for investors. Especially if retailers continue with the brick-and-mortar momentum that’s been happening over the past few months. 

“What we’re seeing is that retailers that need to grow their footprint and monetize new developments are going to meet the market and are going to do deals. If retailers continue to meet the market I think it’ll be a good, active year. If there’s a standoff I think it’s going to be more difficult,” added Fitzgerald.

Source: Retail’s Transformation – GlobeSt
Photo Credit: Unsplash

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