The retail sector closely follows consumer spending behavior. For example, low footfall and sales for a brick and mortar retailer, due to higher e-commerce spending by consumers, directly impacts the retail bottom line, resulting in higher cash-flow risk for the landlord. The average lease term for retail assets has historically been between three to seven years.
Sub-categories of industrial properties available for investment include:
Malls: Malls are large retail properties that include a range of tenants, often with a prominent department store anchoring the asset.
Neighborhood shopping centers: Neighborhood shopping centers are typically smaller than malls. Their anchor tenant profile is also comparatively low-risk, often featuring supermarkets, convenience stores, and/or drugstores.
Single tenant: Assets located in a city’s prime tourist or business hotspots typically benefit from a high volume of shoppers. Single tenant buildings may include ultra luxury brands as well as mass urban brands, and they often pay steep rents. The average asking rent on New York’s Fifth Avenue—one of the world’s most glamorous shopping corridors—is around $2,775, for example.
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