The rise of online shopping has had a massive impact on the retail industry over the past decade. However, some businesses still rely on traditional brick-and-mortar locations and shopping malls to attract customers and keep them coming back. While it might seem like malls are doomed in this era of online shopping, they’re actually still experiencing modest growth. Here’s why shopping malls are an excellent investment in the era of online shopping.
Factors that make brick-and-mortar stores more profitable than online stores
brick-and-mortar stores are more convenient, offer greater variety and higher quality than online retail. Brick-and-mortar stores provide services that online retailers cannot – customers can browse for merchandise, interact with salespeople and try items on. Another benefit of brick-and-mortar stores is their geographic proximity to your customers. On average, consumers shop locally because they need to drive there from home; it’s easier and faster than shopping from your desktop computer or mobile device.
Reasons people still love to shop offline
People who still enjoy physical shopping can find value and ease at brick-and-mortar shops. From small towns to big cities, there’s something about walking into a retail shop that simply can’t be replicated online. For example, where else can you get that sweet thrill of victory rush when you hit up an outlet sale? There is just no substitute for…anything.
The most successful malls are located near office buildings
These malls provide a convenient place for employees to stop and shop, or grab lunch. They are also often located near major highways, making them accessible by car. In addition, because they cater to workers at nearby businesses and restaurants, these locations will draw enough traffic throughout the day to make it worth retailers’ while to set up shop there.
Retail real estate is cheaper than ever
Brick-and-mortar retail is becoming less relevant, which has pushed real estate prices down. In some areas—like shopping malls—prices have dropped so much that they’re below replacement costs. All of which means there’s opportunity for investors to purchase properties on the cheap and enjoy substantial returns as online shopping grows and brick-and-mortar retailers decline. Read more about smart investment strategies for retail real estate here .
As online shopping continues to rise, many retail stores have been closing their physical locations. But not all investors and business owners see these closures as negative; rather, they’re seeing it as an opportunity. One new way to invest money is through acquiring retail shopping malls and leasing them out to smaller businesses that can’t afford their own storefronts. In fact, a share of one shopping mall recently sold for $214 million—the biggest deal ever recorded for a single mall.
Investing in retail real estate is still lucrative despite closing stores
In recent years, retail stores have been closing down left and right. Mall-based retailers have also been reporting dismal sales numbers. But here’s what you may not know: despite closing thousands of stores, mall-based retailers still recorded $5.5 trillion in sales last year, according to commercial real estate firm CoStar Group Inc. Now that these malls are opening up for new tenants (such as gyms), even more money can be made off of their leases.
