Is now a good time to invest in retail properties?

Is now a good time to invest in retail properties?

The COVID-19 pandemic has had a significant impact on the retail property sector and while recovery is underway, some experts predict that it could take years for landlords to recoup their losses.?

In addition, the rise of e-commerce puts further pressure on brick and mortar retailers as consumers continue to purchase products at the simple click of a button.?

However, it’s not all ‘doom and gloom’ for the sector.

International insights?

In January 2022,?Reuters?reported that while technology stocks were off to a ‘rocky start’ for the year, US retail investors were snapping up equities in retail funds, adding that ‘weakness in stocks has been met with retail investors seeking opportunities to buy.’ Investors are buying low in the hopes of selling high in the years to come.?

However, Amazon.com recently announced the closing of all its brick and mortar stores while?The New York Times?reported some retailers are turning to doctors and dentists to take up space in prime retail locations.?

On the local front?

Reports?by FNB released earlier this year indicate an improvement in performance by the retail property sector. In a statement released by FNB’s property sector strategist John Loos, he was quoted as saying: “The Retail Property Market of late appears to have been the “middle of the road” performer, sandwiched in between the underperforming Office Property Market and the outperforming Industrial Property Market.”

Strip malls and mixed-use developments to the rescue

A strong contender in the retail property sector has to be strip malls. There has been a greater demand for strip malls with anchor tenants such as Woolworths and Pick n Pay as more consumers look for easily accessible daily shopping options. These small community and neighbourhood centres were reported to have outperformed large shopping centres in 2019, and this trend is set to continue.?

The history behind strip malls can be largely attributed to La Mancha – developers who built the first ‘mini-mall’ (or strip mall) in Los Angeles in 1973. Today, Los Angeles is still known as the strip mall capital.?

The benefits of strip malls include reduced parking fees, easy access to shops, close proximity to home, and convenience.?

Mixed-use developments (a mixture of residential and commercial properties on a single development) also represent the future of retail, with many consumers seeking the convenience of shopping on their doorstep. More and more developers are opting to include high-end grocery stores and eateries onsite to offer residents all they need in a single location, without having to get in their car to stock up on the essentials.

If this article entices you and you are in search of retail investments, why not chat with our team to help find your dream property?