It’s time. We’re expanding asset classes, and guess what? We’re going shopping! Now is the perfect time to get into the Retail sector; read on to find out why.

Retail Assets

We’re all familiar with the “location is everything” concept, but it’s particularly true regarding retail as an investment. In pre-covid times, retail centers near downtown areas were thriving; however, the retail landscape experienced significant closures during the pandemic, now prompting a closer look at the future of this sector.

The shutdown, unfortunately, forced many once-beloved shops and restaurants to close their doors for good, but even after public spaces re-opened, there was still a massive shift in how people shopped. People had become accustomed to shopping online and weren’t going into stores as frequently as before. But as people felt safer returning to the world, we slowly saw consumerism rise again; it looked different this time.

A notable trend emerged amid these changes – well-located retail spaces began to thrive. But what is “well-located”? It’s no longer the city-center malls garnering all the attention; the traffic shifted to the suburbs.

This shift shows us that people still love to shop in person; they desire a more personalized experience, to receive assistance, and to be able to try things on in advance. It also shows us the impact of remote work.

Malls near office spaces used to be the most successful, but now, most people no longer drive long commutes to work; they simply walk down to their living room or home office.

Traditional office-related foot traffic has dwindled, showing us a change in how people approach retail therapy. Consumers now seek an adventure outside their homes by going to their local retail centers to shop, play, eat, and socialize. It might be different now, but it’s certainly not gone.

Retail is still thriving because although approximately 3500 retail centers closed, 4500 new ones emerged. The opening of new retail centers vastly outnumbers the closures. This data highlights a nuanced picture of the retail landscape, where closures do not necessarily indicate a downturn but rather a reallocation of consumer interest. The focus is shifting towards locations that offer a unique and convenient shopping experience near their homes.

Mall Dynamics and the Appeal of Newer Centers:

Another notable shift is that older Malls built in the 1960s-1970s now feel outdated and dilapidated and no longer attract the same attention. Consumer preferences shifted towards newer shopping centers equipped with modern amenities.

People want to spend their leisure time somewhere that feels socially welcoming, creating an aesthetic backdrop for time with friends. The appeal lies in the retail offerings, ambiance, and additional amenities that enhance the shopping experience. This brings us to retail with entertainment.

Entertainment Venues as Driving Factors:

One significant trend influencing the retail and entertainment landscape is the increasing demand for experiences. Beyond traditional shopping, people seek reasons to visit retail centers, and entertainment options play a pivotal role. Notable examples include AMC movie theaters and Dave & Buster’s, which have become anchors drawing people to these centers.

You can get some shopping done, then go out to dinner and a movie while your car stays in the same parking space. Entertainment venues provide a compelling reason for individuals to visit retail spaces. AMC movie theaters offer a cinematic experience, and places like Dave & Buster’s give an interactive and social environment with arcade games and dining options. These attractions not only contribute to foot traffic but also extend the duration of consumer engagement within the retail center.

Investing in AMC and Dave & Buster’s:

From an investment perspective, the unique aspects of a post-COVID retail center with AMC and Dave & Buster as anchor tenants merit attention. As a prominent movie theater chain, AMC faced challenges during the pandemic due to restrictions and the surge of streaming services. However, the demand for in-person cinematic experiences has seen a resurgence.

AMC’s exploration of alternative revenue streams, such as private theater rentals and partnerships with streaming services, showcases adaptability in response to evolving consumer behaviors.

Dave & Buster’s, known for its combination of dining and games, occupies a unique niche. The focus on providing a social and interactive experience aligns with the growing demand for experiential entertainment. As social interactions become more valued post-COVID, venues like Dave & Buster’s are experiencing increased demand for group activities and events.

Decision-Making Factors:

Investing in retail assets with entertainment venues like AMC and Dave & Buster’s or multifamily real estate hinges on several factors. Investor risk tolerance, financial goals, and market conditions are critical in shaping investment decisions.

For those inclined towards retail, the emphasis should be on well-located spaces that align with changing consumer preferences. The appeal of newer shopping centers with modern amenities cannot be overstated, and investments in such properties may provide a competitive edge. With their focus on delivering unique and engaging entertainment, AMC and Dave & Buster’s could see increased patronage as people seek out social and interactive activities.

Retail assets, when strategically located, can thrive in the new normal. We’re thrilled to expand into the retail sector and help facilitate people coming together to enjoy social activities again.

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