Property Rights Law Firm, P.A.
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Retail sector lagging as CRE growth continues

The value of commercial real estate in Florida and around the country plummeted in late 2008 when the Lehman Brothers bankruptcy filing triggered a financial crisis. Things remained difficult for commercial property developers for the next few years as the economy spiraled into a recession, but office space is now once again in high demand as consumer confidence has recovered and the economy has started growing again. However, the retail sector is the one area of the commercial property market that has failed to recover, and many industry analysts are extremely concerned about vacancy rates that remain stubbornly at about 16 percent.

Shuttered and vacant stores are a not uncommon sight in many of the nation's 50,000 or so shopping malls, and most analysts expect the situation to become worse rather than better in the years ahead. It is widely accepted that online shopping is the biggest challenge facing traditional bricks-and-mortar retail establishments, and a great many household names are perilously close to joining Borders Books, Circuit City and Blockbuster Video on the retail ash heap.

More than 650,000 American companies generate online sales of $1,000 or more each year, and the continued growth of Internet shopping has cast a dark shadow on any slim hopes of a retail recovery. These fears have rippled through the entire commercial property sector and are partially responsible for the sluggish performance of the commercial mortgage backed securities market.

The convenience and popularity of online shopping adds an element of risk to any commercial real estate development that features large amounts of retail space. Such projects are often undertaken only after primary retail tenants have made concrete commitments, but much can change in the time it takes for a development to move from the drawing board to completion. Attorneys with real estate experience may seek to reduce the exposure of property owners and investors by reviewing proposed lease agreements and suggesting revisions designed to ensure that the tenants honor their commitments.

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