There are some predictions you just don’t want to come to fruition. As bad as things have been for retail, they just seem to be getting worse. It’s beginning to look as if the operating environment will assist in expediting the ripping-off-the-bandaid solution to what ails retail, that is resolving the overcapacity scourge that’s become the new retail reality, seemingly overnight.
If you’re into connecting the dots for fun during trading days that seem to stretch into an infinite sea of complacent calm, consider the value of the land under the malls that won’t be with us in the near future. These malls of our collective past may today be rendered irrelavent, labeled as they are ‘B’ and ‘C’ properties. But many are in pristine locations.
Viewed through this cold prism, you’ve got to give credit where it’s due. Gleaning value via preemptive store closers salvages what little there is to be had from the wreckage. This will work for those nimble first movers.
In such fluid environments, though, wrinkles set in fast. Enter auto dealers, who are also waking to the reality of requiring smaller physical footprints to maximize profitability. (Yes, Virginia, you can shop for a car on the World Wide Web.) The question is, what happens when shrinking dealers’ real estate listings collide with the supply of primo real estate coming onto the market via mall razings?
The short answer is anyone who tells you they know the end result is lying. We are sailing into uncharted waters as Columbus did way back when. Oh, and by the way, concluding the exercise of connecting of dots requires you incorporate oncoming record supplies of multifamily and lodging properties. Starting to get the fuzzy picture?
For more on the potential for the retail meltdown to converge with peak autos, please enjoy my latest weekly Bloomberg Prophets column: Car Sales Will Be Key to Job Creation — The renewal of the auto industry has been a major driver of economic growth in recent years.
If that’s not uplifting enough and you’re hankering to hear how I really feel about the latest economic developments and where my former employer, the Federal Reserve, fits into the equation, please listen to to a recent interview with Bloomberg’s Pimm Fox:
Signing off from Norfolk, VA where business has carried me and I’m happy to report, crabs are in season.