Latest Commercial Real Estate Market News & Investment Advice in Los Angeles

Retail Sales Continue At A 4.5% Yrly Growth But There Are Challenges

April, 2018
by Karl Niehaus, President, CREI

Commercial Overview:

RETAIL SALES CONTINUE AT A 4.5% YRLY GROWTH BUT THERE ARE CHALLENGES. Retail is changing with big box stores downsizing or filing for bankruptcy as their inefficient and outdated business struggle in a new world of convenience. New retail brands are emerging and successful at slower pace. Large malls in particular have struggled to bring clients to the mall and the focus is shifting in to providing experiences rather than items clients can buy cheaply online. The focus for investors must be to find retail properties in locations that have built in traffic and clientele for their tenants to ensure that headaches and vacancies are avoided. 

Economic Overview:

GROWTH IN THE ECONOMY BRINGS RISING INTEREST RATES as the Fed looks to control inflation and add padding to the economy. This coupled with the Fed's reduction in bond purchasing program has put upward pressure on rates. With the cost of money increasing, commercial property sales prices will adjust down. As long as the economy continues to do well with unemployment low, the expectation is a continuation of increases to the interest rates. The reduction of property prices may however be held back if trade war problems cause the Fed to hold back on increasing rates or continue with its bond purchasing. The next year will be interesting.

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