The Next Financial Implosion Is Not Going To Be About The Banks!

Let's focus as an example on just one of several Paradigm Shift occurring presently, and in just one of the retail commercial real estate spaces, that is US Retailing.

This Paradigm is about the massive technological advancement of the overlapping of the internet, online shopping and robotic kiosks. This change alone is monumental but not yet fully accounted for by those sitting on the trillions of dollars of investment assets who cannot react as fast as the technology adoption is occurring.

  • Since 1995, the number of shopping centers in the U.S. has grown by more than 23% and GLA (total gross leasable area) by almost 30%, while the population has grown by less than 14%
  • According to Forbes , currently there is close to 25 square feet of retail space per capita (roughly 50 square feet, if small shopping centers and independent retailers are added). In contrast, Europe has about 2.5 square feet per capita. (10-20 times)
  • According to the real estate consulting firm of J. Rogers Kniffen Worldwide Enterprises, about 400 of America's 1,100 enclosed malls will fail in the coming years. Of the survivors, about 250 will thrive and the rest will struggle. Likewise as an example, "Macy's probably needs 500 of its roughly 800 existing stores" -  Jan Kniffen

Over-storing can be traced back to the 1990s when the likes of Walmart (WMT), Kohls (KSS), Gap (GPS) and Target (TGT​) were expanding rapidly and opening new divisions, according to Ken Perkins, the head of Retail Metrics, a research firm that advises institutional investors on the sector.

“In my opinion, the housing bubble of the mid 2000s allowed consumers to take out tons of cash from their homes and spend robustly even though incomes were stagnant. This masked the over-stored nature of the retail landscape“.

AMERICAN REALITY IN PICTURES

I recently produced a video for MATASII subscribers documenting a trip to a well established local mall in my area. The video is called "A Rapidly Rupturing Retail Reality!" It brings home the stark reality of the above statistics.

If you haven't been to a mall in a while it will shock you. The retail landscape is changing rapidly and dramatically.

The recent closure of all 140 Sports Authority stores in the US is part of a trend showing no sign of letting up any time soon. Consumers continue to shop online like never before, as traffic dwindles in brick and mortar stores.

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Disclosure: Information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, ...

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