Retail REIT and CMBS investors were pleased with the recovery after The Great Recession when retail commercial real estate prices fell then rebounded. But we are seeing a crucial turn in retail real estate values.
The cause? The 2017 surge in retail store closings.
In terms of square footage, it is anticipated that retail store closings will be the largest in modern history.
Smaller retail footprints like RadioShack lead the announced closures.
Digital (online) shopping took its toll.
And stagnant wage growth for the majority of Americans hasn’t helped. The worst after a recession in modern history.
Retail vacancies are now about 10% again after zooming upwards during The Great Recession.
Retail (mall) REIT Kimco has not had a good time since July 2016.
It was the Ides of March (best known as the assasination date of Julius Caesar) for housing. Housing starts dropped -6.75% month-over-month (MoM) in March. Both 1 unit starts and 5+ (multifamily) starts were down for March.
The decline was led by the Midwest at -16.22%. But the West had nearly the same decline as the Midwest.
Way out West? Down 16% from February.
Notice that neither the Midwest or West have nearly the growth that they experienced during the housing bubble.
And this is in spite of staggering monetary stimulus from The Federal Reserve.
“You mean our zero interest rate policy and massive agency MBS purchases DIDN’T stimulate housing construction like before???”