We would normally think that rising retail sales are good for retail commercial property. You know, landlords manage to gain a slice of the increased demand for stuff sold out of their land? However, while that’s usually a good way to bet it’s not a sure thing.
For what happens if it’s retail sales not coming from high streets adorned with landlordism? Where is your landlord now? And that’s what is happening. While there is growth in those retails sales there’s a technical reason around the oil price plus the growth of online shopping. That is, Philip Green, Monsoon, Debenhams, Hammerson, Land Securities, they’re still heading around that u-bend.
After those effects of fuel we find that it’s still really pretty much online driving the sales growth. Which means that retail property isn’t going to benefit from this sales growth. Which is the important thing to take away from these retail numbers. Normally, we think that rising retail sales will be good for retail commercial property companies. Landlords always do end up with a slice of the action after all. Except this rise in sales isn’t in that bricks and mortar sector. Thus landlords won’t benefit. Commercial Property Doesn’t Benefit From This As we’ve said before British retail commercial property has a significant problem. The amount of empty retail property is moving in lockstep with the rise in online retail sales. We’ve that underlying structural change going on….
We can only work out what any economic statistic is telling us if we really understand how it’s composed in the first place.