Commercial real estate is an appealing venture for many investors, with high returns on investment (ROI), numerous tax breaks, and a high potential for growth. In fact, “after stocks and bonds, real estate is the third-largest asset class in the U.S and commercial real estate (CRE) is estimated to be worth $16 trillion,” writes Shawna Wright-Smith, Crowdstreet. And a lucrative subset of CRE is retail, which continues to average 4 percent to 5 percent annual growth, explains Jeffrey Bartel, Forbes Finance Council. However, the COVID-19 pandemic has scared away many potential investors. “Despite apparent gains, the insolvency rates for retail companies have accelerated at a rapid pace,” says Bartel. So, it’s important for investors to partner with an experienced Retail Real Estate Broker to minimize risk (there is never zero risk when investing) and maximize profitability.
2022 Retail Real Estate Outlook
“Following the economic uncertainty that loomed over 2020 (and 2021), many question if now is the time to get into retail real estate,” explains Bartel. “With all of this said, the future of retail real estate is not as grim as recent statistics may make it seem.”
It would be naive to think COVID-19 hasn’t affected the retail industry at all. Retail bankruptcies are up. The vacancy rate at malls rose to 10.1 percent, the highest rate in 20 years. And some analysts are predicting 20 percent less retail real estate by 2025. However, smart investors still have an opportunity to grow their portfolios and experience high ROI. You see, not all retailers were affected equally. Grocery stores and big-box retailers, for example, have been relatively unscathed. So, selecting potential tenants is more important than ever before. The right space and the right tenant can still produce a favorable return for investors.
“Investors willing to take a risk have the potential to continue to reshape the market,” says Bartel.
Just as healthcare facilities are having to shift their space needs to include telehealth (virtual) options, so too are retailers having to address the demand for online shopping. “Retail portfolios must account for the blur between their physical and digital channels,” says Bartel. “The future of retail real estate must deliver convenient multichannel options, timely fulfillment to customers’ homes and immersive consumer experiences.”
Partner with a Retail Real Estate Broker
“Beginners should be aware of the investment risks involved with this real estate property type,” explains Paulina Likos, an investing reporter at US News & World Report. “Every investment carries with it some kind of risk, and commercial real estate is no different.” But working with an experienced retail real estate broker can help minimize risk (as we said before, there is never zero risk). These CRE brokers understand the industry inside and out and can help investors make strategic decisions to maximize ROI potential.
The first rule of commercial real estate investment is that you don’t have to go it alone. In fact, the most successful investors have trusted partners they rely on to identify good investment opportunities, negotiate favorable terms, and, ultimately, close the deal.
An Experienced Retail Real Estate Broker in Maryland
It all starts by selecting the right location, which is often easier said than done. Partnering with an experienced retail real estate broker, like United Development Realty, allows investors to leverage very specialized industry knowledge to not only find the right location, but also negotiate a price that makes sense for you. We provide CRE consulting services throughout Maryland, to help investors, like you, achieve their goals. We start with you: your vision, your objectives, your goals. Then, we assist you through a tailored package of services to locate a property that fits your vision.
Please call our office (locations in Bethesda 240-221-1976 and Fells Point 410-522-1632) to get in touch with a licensed broker today.
- Bartel, Jeffrey. “Council Post: The Future of Retail Real Estate: What to Expect.” Forbes, Forbes Magazine, 22 Mar. 2021, https://www.forbes.com/sites/forbesfinancecouncil/2021/03/22/the-future-of-retail-real-estate-what-to-expect/?sh=39fe396a2cbf.