How Retail Real Estate is Recovering from the Pandemic 

03.08.22 08:32 AM Comment(s) By Assetsoft

More business and new transformed consumer behaviors were major trendsetters for the retail shopping industry. As a ripple effect, the retail real estate industry also changed and suffered quite a setback during the two years of the pandemic.  

 

Managing such retail real estate businesses became even more challenging given the low revenue in this industry for the past two years. So, how is this industry coping with the new changes? Is it recovering, or is it still grilling under the after-effects of the global pandemic?  

 

Our team at Assetsoft has years of experience in working with real estate companies and keeping up with trends to help in better project management. We have used that experience in curating this article.  

 

Here we discuss the pre and post-pandemic changes in the retail industry and how it in turn reshaped and changed the real estate business. Read on to find out what it means for your real estate company and how you can rethink your strategy and leadership to steer through these tough times in business.  

The effect of the pandemic on retail stores 

According to Forbes news reports, consumers in the USA spent more than $211.5 in e-commerce in 2020 itself. Most of this came from a shift from retail shopping, and that crowd steered towards e-commerce due to restrictions in travel and general social distancing norms. Though these trends started in 2020 during the pandemic, some of these are here to stay and reshape the retail industry. Here’s how.  


  1. Touch-free shopping 

 

When it came to shopping, the most significant aspect of it before the pandemic was to see and feel things before investing money in them. Now customers readily buy home utility products to homes themselves on online platforms. 


Credit or debit card purchases at retail outlets are becoming obsolete, and no-touch digital payments are rising. Like Amazon has launched its new no checkout shops where you can simply pick up the stuff you want and walk out without any interaction or payment. How does it work? The money is deducted from your bank or Amazon wallet without you having to worry about direct human contact. Many retail stores started using their stores as storage units and started selling their goods online to beat the rising e-commerce sales.  


  1. Everything stores are trending 

 

Mass-scale retailers who do not specialize in one type of product but sell a wide variety of products are trending in the market. Stores are now expanding their products from just groceries to selling utility products and merchandise all under the same roof to attract more customers. Why? Simply because customers tend to go out as less as possible due to the pandemic, and when they do, they want all their shopping needs fulfilled in one place.  


  1. Malls and stores take a hit 

 

Malls and other retail stores like clothes and electronics were categorized as non-essentials during the beginning of the pandemic and had to close shop. One of the biggest mall owners in the US, Simon Property CEO David Simon, said that he lost worth 10,500 days of shopping business right after closing down due to the pandemic. It was getting harder to make rent as most shops were not selling anything to be able to make rent. It became an extremely volatile situation for the Commercial Real Estate owners and property managers. David Simon also mentioned that he had only collected 71% of the rent in July 2020, and 29% of it was due to the COVID-19 crisis and lack of business.  

 

E-commerce vs retail shopping during pandemic 

When most retail shops took a hit during the pandemic, e-commerce was thriving. People shopped from homes and that saw a major rise in consumer buying tendencies. According to NCL survey reports, e-commerce saw a 44% rise in year-over-year sales, whereas retail saw a 3.5% decline in sales. How did this affect Commercial Real Estate (CRE)? 

 

Warehouses soared in demand due to this rise in e-commerce sales. According to the Bloomberg news reports, companies like Amazon, Walmart, Target, and more expanded their warehouses three to four folds within the last two years of the pandemic. This helped many CRE owners to stay afloat in this crisis-driven market. Though their retail shop tenants were not able to pay rent, their warehouse tenants were increasing their demand.  

What recovery looks like for the retail 

Everything is not so grim in the long run. Even retail shopping quickly adapted to new trends to keep itself relevant in the market.  

 

Hybrid shopping is becoming an everyday reality, and retail shops need to follow this trend. People get a glimpse of the products on online sites and then make the final purchase inside shops or the other way around. Or like Amazon started its no-checkout stores where there is no human contact during retail shopping, yet it offers the experience of in-store shopping. Retail shops have to bring in digital innovation and proper technology selection to advance in the post-pandemic era.  

Retail is moving on from the pandemic 

The commercial real estate business, when it comes to retail shops, has suffered more during the pandemic. Many companies even filed for bankruptcy due to the pandemic. Are you a commercial real estate owner struggling to maintain all of the properties under your portfolio, make rent, and still stay afloat in these crushing times? You need to start using the proper technology selection in project management to streamline your work. Digitalize your processes, invest in real estate that is in demand like warehouses and slow down on the construction of new retail spaces like malls or shops. 

 

It is time to rethink your strategy and leadership; take a moment to regroup and revisit your business plans and customize them according to the present market trends. The real estate market and economy, in general, have become very unpredictable since the pandemic so you need to stay constantly updated and quick on your feet to work around these problems.  

 

At Assetsoft, we assist in planning strategy and leadership for real estate companies; we also offer expert project management services. Our tech experts can also help you with the right technology selection to streamline your property management tasks, be it commercial or residential real estate.  

 

Wondering how we conduct our work and what other services we offer? Speak to us today to get more details.  

Assetsoft

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