The road for the last year and a half has been bumpy, to say the least. The Pandemic, the election, and the supply chain have been challenging. Yet, despite these challenges, the shopping center industry continues to grow. Demand for retail space is surging back to pre-Pandemic levels. Tenants have generally stayed current with rents, working out agreements for abatements and deferrals. Further, despite a record number of bankruptcies in 2020, retail bankruptcy filings have been virtually silent in 2021. With vaccinations slowly inching upward, it appears that life is starting to get back to a new sense of normal (although with a mask in your back pocket).
Following are some trends and issues that our Shopping Center and Retail Development Group believe will be of keen interest during the next 12 months:
- Holiday Sales Expected to Grow Almost 9% this Year. Recent information by ICSC indicates that shoppers are starting their holiday purchases earlier. ICSC’s Annual Holiday Shopping Intentions Survey forecasts an 8.9 percent year-over-year increase in November-December sales, with the total expected to reach $923 billion. Such a boost in holiday sales could be a real boon to the economy and leasing in the retail industry.
- Tax Policies. With the Infrastructure bill pushing through Congress, the focus is on how the bill will be paid for. Despite early concerns about Congress paying for the same through higher tax revenues from carried interest, 1031 exchanges, or middle and higher earners seem to be off the table. But, a possible increase on billionaires could be a significant source. How the bill, if passed, is paid for will have significant ramifications for the shopping center and retail industry.
- Smoke ‘Em If You Got ‘Em – Legalizing Cannabis? The Safe Banking Act passed the House in April 2021. The bill generally allows banks to service legitimate cannabis-related businesses. According to Forbes, Senate Majority Leader Chuck Schumer (D-NY) said advancing federal marijuana legalization is the first priority. Currently, only seven (7) states have not decriminalized or allowed medical use. The legalization of cannabis could be a huge driver of a new tenant base for some centers.
- Enforcement Actions. Most of the states’ commercial eviction moratoriums have expired or are set to expire in early 2022. This means that landlords have the ability to remove unpaying tenants and fill space with demand. Getting through the inevitable backlog of cases will be of prime concern for landlords.
These four (4) “mile markers” are just a few items determining the road ahead for commercial real estate. Whether you have leasing, financing, purchasing, or need assistance with enforcement issues, Stark & Stark’s Shopping Center and Retail Development Group can assist you. Feel free to contact the Group’s Chair, Shareholder Thomas Onder, at (609) 219-7458 or firstname.lastname@example.org. Mr. Onder writes regularly on commercial real estate issues and is an active member of the International Council of Shopping Centers (ICSC). Mr. Onder is State Chair for ICSC PA/NJ/DE region.