Monday, May 16, 2016

Malls are already and will be more discerning of their tenant mix

The biggest hearsay is that REITs create an artificial environment where the fundamentals are non-existent. They are a bubble waiting to burst. I find this way of thinking really absurd.
agree with lots of points in the post above. but when you look into it, he is not really arguing against retail malls facing competition. but against biasness against REIT malls. (I see no discussion about commercial or industrial.)

Moving on, going towards online shopping and in-person retail, let's review a bit.

1. we know online shopping takeup in huge in the US.
2. we know online shopping is getting big in Singapore.
3. we know singapore plans for nationwide parcel delivery.
4. we know they are launching last mile delivery for malls. (why?)

I feel some of the stores that depend more on in-person sales of physical goods will lose out in rental paying capability to those that are able to generate more from in-person purchase of services (playgrounds, movie theatres, salons, entertainment outfits, F & B, and other new forms).

In tight times, people pinch pennies and spend less and I feel physical goods sales in malls will suffer. The reverse may be true for better times. I don't have the figures for that.

I think there is a case for a entry in REITs when you notice a changing mix in malls.

but of course, we will be considering the macro: interest rates, availability of credit ...etc.