Compared with other types of commercial real estate, brick and mortar retail had been in crisis for years even before the coronavirus hit. The average compensation of most U.S. workers has been falling for decades, offset by rising public and private debt, and after 2008 consumer spending finally began to follow, as those debts no longer covered the difference. Dollar stores became one of the few sources of retail growth. Then e-commerce started taking a rising share of whatever consumer buying power was left. But even before that suburban and Sunbelt America, built after WWII, were thought to be “overstored” as a result of decades of local zoning policies that favored commercial tax “ratables” that provide property and sales tax revenues, but sought to exclude multifamily housing that might attract less-well-off people, whose local service needs exceeded the local taxes they paid.
The national average is about 46 square feet of retail space per capita, with most metropolitan areas having between 40 and 55 square feet per capita…By global standards, the U.S. has much more space devoted to retailing than anyone else: comparable estimates for other countries include: 23 square feet per capita in the United Kingdom, 13 square feet per capita in Canada, and 6.5 square feet per capita in Australia. If the experience of these countries is any indication, it’s a good bet that there’s lots there’s still lots of room for downsizing in the U.S. retail sector.
Before the virus hit the real estate industry was responding with a burst of innovation, shifting space from retail stores selling goods to service establishments selling health care, entertainment, dining, and exercise. Along with housing, where permitted. Then the coronavirus shut down many of these alternatives. So now what?