Trepp LLC: Property Type Snapshot: Retail 2016

The retail sector has been the subject of grim headlines since the recession. Lately, Sears, JC Penney, Sports Authority, Macy’s, Aeropostale et al. have announced either more store closures or total liquidation. There have been some heavy losses on regional malls in secondary and tertiary markets while Ecommerce has dramatically changed and will continue to shape the industry. The oft-scorned millennial generation spends more on rent and student debt than consumer goods. They also prefer

to shop, and do pretty much everything else, on their phones.

Despite negative news, the notion that the end is nigh for brick and mortar retail is overstated. Grocery anchored retail is in high demand, Ecommerce giants are slowly opening physical stores or showrooms, and retail landlords are adapting to fill space left behind by the big box players. Most of the distressed loans have been sold or resolved by special servicers and

default rates have hit a post-crisis low. Fundamentally, average occupancy has increased every year since 2009 and NOI growth has been significantly positive since 2011.

The full report can be found here