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TRC Blog

April 15 , 2011

Steve Lieberman: Shifting Dynamics in the Retail Sector

Daily Reports on Commercial Real Estate


RealPoints D CEO
By
Steven A. Lieberman

April 15th, 2011 11:13am


Throughout North Texas, most of the best retail spaces have been absorbed, and there is little to no new product being developed. This leads many to think the supply and demand dynamic is going to shift the balance of power back to the landlords. And in many cases, it will.

Weak retailers that go to landlords for rent reductions are going to find many of those landlords willing to reduce their rent to zero and terminate their leases, so spaces can be released to stronger operators. At the same time, there are no set rules. And retailers, like most businesses, have learned to operate more efficiently the last couple of years. These factors, combined with reduced competition, is going to enable certain retailers to let their leases on redundant locations expire, confident they will pick up make up for those sales at nearby stores.

So the point is, retail real estate is an inefficient business. There are no hard and fast rules, and the dynamics of what makes for successful retail operations are extensive.  No one variable, including supply of space, is going to change that.

Steven A. Lieberman is CEO and co-chairman of The Retail Connection. Contact him at slieberman@theretailconnection.net.

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