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Retail vs Industrial real estate investments post Covid?

Retail vs Industrial real estate investments post Covid?

For the next few years the retail market will underperform significantly, however, the real debacle will be in office space. Office space is the slowest debacle you can ever imagine because the average office lease is five to seven years and the average office tenant has hundreds of thousands of dollars in the bank. The average class C tenant has $400 in the bank, so it's very difficult for companies to default on leases without destroying their credit history. 

So back to e-commerce. There is no change in that trend line. E-commerce growth is four to five times the U.S.’s population growth (or even more), and then it went straight line during COVID. When it came back, it didn't plateau. It went back to that original trend line and that trend line is many times faster than the U.S. economy.

The industrial market is an incredible market. It's a very hot market and it will continue to outperform for the next 15 to 20 years.

Keep in mind that we had straight line growth for a while, but at this point, maybe 13-14 percent of all retail in the U.S. is online. I still think that there's enormous growth that happens there in the next 15 or 20 years. All those grandmas and grandpas that now have learned how to buy stuff from their iPads are going to keep buying, and younger folks are just growing up knowing that e-commerce is the way to go, which it is.

It's a more efficient way of doing lots and lots of things. I buy 600 items a year from Amazon, so I believe that you are going to see significant demand in the industrial space, especially in the piece that has the roll-up doors and you can bring large trucks in the fulfillment piece is going to see absolutely astonishing demand for the next 10 years, and will see slightly outperforming multi-family over the next 10 years. 

Key points:

  • Resilient recovery
  • Retail vs. Industrial Investment
  • Market opportunities after COVID

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