"No Magic Bullets" During the Retail Evolution

Toomey: “It is critical to understand every facet of the property, including tenant health, location, and larger economic drivers including job growth, population growth trends, traffic counts, and future development plans in the area.”

IRVINE, CA—Retail property investors have seen their fair share of scares this year, from the Toys ‘R’ Us bankruptcy filing to the downsizings of Radio Shack and Payless ShoeSource, among others. Meanwhile, big box concepts and malls continue to give reason for concern. The industry is in the midst of an evolution, says Patrick Toomey, senior managing director at Faris Lee Investments, but understanding each property’s fundamentals can help investors make strategic decisions. GlobeSt.com met up with Toomey to hear where he thinks the sector is heading.

GlobeSt.com: Is there cause for concern over so many retailers shuttering their doors?

Patrick Toomey: Retail is like any other business, and those that fail to evolve and remain relevant become irrelevant and often extinct. Technology and ubiquitous access to information is changing how we think, how we shop, and how we invest. It’s just an evolution, and savvy businesses adapt and evolve to keep up with their customer. Retail is an interesting, dynamic and fluid industry, that flows and changes based on consumer trends, tastes, and budgets, among other things.

So, I would say that there is concern for retailers shuttering stores, but it relates more to cases of them not willing or able to adapt, debt loads, inefficient store size, or non-compatible co-tenants, among other reasons. For instance, retailers and restaurants this year will have opened 4,080 more units than they have closed. Also, a retail analyst shared that 2,783 store closings in specialty soft goods are attributable to just nine retailers. All is not lost, but there are changes occurring.