future of shopping centers/strip malls

[Casey Rozas]

I have been reading different articles about the future of strip malls/shopping centers. Some predict half of them to be closed by the mid 2030s mainly due to e-commerce. 2 years ago I built a 5 unit strip mall with an additional building next to it that is currently 83% occupied. I hope to have this thing paid off in 6 more years. My actual cash on cash return is around 14% right now even though I'm putting most of the income towards reserve and the mortgage. After it is paid off I should have a very nice income from it without hardly any overhead.

However, after reading these articles it has me worried about the future of this investment. I thought it was interesting and wanted to see what other investors out there think. I could find the articles and post the links but don't have the time right now, but simple google searches can bring them up

[Joel Owens]

NOPE. Retail is alive and thriving everyday of the week and won't change like you are talking about. Now there are some rural locations or bad locations mid block in a good area with poor sight lines or access that will be difficult to rent.

That has nothing to do with e-commerce. E-commerce is complimenting brick and  mortar and not taking it away. Large big box they had to learn how to use e-commerce in tandem when it first came out. You had a big surge in online sales followed by the big stores using the old way and scratching their heads. Now they have figured out how to position stores so they synergistically work together. Some big box is still affected permanently like Office Max,Office Depot etc.

We focus on destination type tenants where the consumer goes there and has to drop money. They can't go do it only online etc.

90% of retail closures last year are clothing and furniture related stores.

So with retail it's about the location and design of your center along with the make up of the tenant mix. That determines the strength and longevity of the asset over time.