... Soldier, Sailor.
Various brain-farts from a chat about retail space.
Bricks and mortar retail dead? Rents in Australia squeeze out tenants and profits in shopping centers. Poor conditions flow to landlords. The ASX's largest retail REITs Scentre (ASX:SGC) and Vicinity (ASX:VCX) have indeed been losing value for years.
Same in the UK. Even the global Unibail-Rodamco-Westfield HQ'd in France.
Then again, the uninspiring-ly named Shopping Centres Australasia Property Group (ASX:SCP) has been on a tear at the same time. Their self-description, front and center on their website: "[a] REIT with assets predominantly anchored by non-discretionary retailers." From their list, that means grocers like Coles, Woolworths, Liquorland, and Dan Murphy's.
(😓Uncomfortable Irish stereotyping face.)
OK, so that type of bricks-and-mortar retail isn't dying. The type where you die horribly if you don't go there regularly to get food or booze.
(😓Uncomfortable Australian stereotyping face.)
So discretionary retail is dead? Maybe not.
Mate told me about visiting Disneyland and Galaxy's Edge where Greedo sells you space-bottled-water for US$5. This Space-Dan Murphy's would also pour you one Pan-Galactic Gargle Blaster for the price of four regular Earth-drinks.
What is Disneyland? Is it Retail? Office? (shudder) Residential?
(😓Uncomfortable working-poor humour face.)
'Parks, Experiences, and Products' made up about 36% of 2019 revenue for Disney - the largest operating segment.
Find more statistics at Statista
Whatever Disneyland is, they should tell less fortunate retailers so that they too can send their mark-ups into the magical kingdom. (Actually, please don't do that.)
Could it be that beloved tales and heroes like the Avengers were just billion dollar advertisements? (Enticements? Get you in the mood before we get you in the door? Say no more? Nudge wink?)
OK, so that type of bricks-and-mortar retail isn't dying. The type where you die horribly if you don't take the family there to get food or booze.
Let's cut to the chase: I know what retail is dying. I'm a '90s kid who was forced to shop in malls because the internet wasn't an option. I've seen my share of boutique shops, their high prices, cranky owners, and poor range. Say you're moving all-online because the rent is zero? Fine. It means customers weren't exactly clamoring with their dollars for you to stay. The physical experience of going to see you sucked just a little less than the penalty for not doing so.
That I can get your products by mail means I never needed to see you face-to-face anyway. I am exposed to logistics REITs. They've blossomed together as online shopping fumbled its way from eBay to Alibaba. So we cool.
And if your e-business graduated from WordPress Free Tier to AWS, congrats. Anyone in an S&P500 index fund has skin in Amazon. We very cool.
Not everyone can provide sustenance like Coles or experiences like Disney. Vacating tenants make room for those who can.
Shopping centers are not inherently unpleasant. I love going to my local Westfield. It's clean, air-conditioned, and has Wi-Fi. It's constantly improving, which makes it only middle-of-the-pack. Its cousins in the rest of South East Asia are miles ahead with their facilities and tenant mix, but Japan's dated station-front ekimae-ginza/駅前銀座 will never catch up. Sure, modern shopping centers can be soulless, but 'character' is for people who've never needed a clean public toilet.
Which brings us to the question, what is 'retail space'? Is it dedicated purpose Disneyland? Is it a mega-mall that has become synonymous with a suburb like Chadstone or Arndale? Is it roadside strip dependent on on-street parking? Is it outer fringe corner shop with chicken wire across the windows? The good news is that all are evolving, but just like online retail it's going to take some time to sort out what works and what doesn't.
I wouldn't see reduced rents and vacancies as a failure. Even the desertion of entire malls can be glass-half-full.
Worst case scenario: vacant malls make room for warehouses and data centers. Maybe more advanced ones designed ground-up for automation so that facilities for humans don't have to be retrofitted out. 10 years ago I wouldn't have imagined data center REITs, yet here we are. See, land's killer feature is that it can be repurposed, perhaps even for uses we haven't thought of yet.
Land use is not limited, just as A.A. Milne takes the nursery rhyme beyond tinker, tailor, soldier, or sailor:
* I've new interest in land as I bought into diversified REITS. It's how I connect to the real world. Sad, really. Still overweight property but at least this time it's indirectly.
Various brain-farts from a chat about retail space.
Bricks and mortar retail dead? Rents in Australia squeeze out tenants and profits in shopping centers. Poor conditions flow to landlords. The ASX's largest retail REITs Scentre (ASX:SGC) and Vicinity (ASX:VCX) have indeed been losing value for years.
Same in the UK. Even the global Unibail-Rodamco-Westfield HQ'd in France.
Then again, the uninspiring-ly named Shopping Centres Australasia Property Group (ASX:SCP) has been on a tear at the same time. Their self-description, front and center on their website: "[a] REIT with assets predominantly anchored by non-discretionary retailers." From their list, that means grocers like Coles, Woolworths, Liquorland, and Dan Murphy's.
(😓Uncomfortable Irish stereotyping face.)
OK, so that type of bricks-and-mortar retail isn't dying. The type where you die horribly if you don't go there regularly to get food or booze.
(😓Uncomfortable Australian stereotyping face.)
So discretionary retail is dead? Maybe not.
 |
| Live long and prosper, Darth Beeblebrox |
Mate told me about visiting Disneyland and Galaxy's Edge where Greedo sells you space-bottled-water for US$5. This Space-Dan Murphy's would also pour you one Pan-Galactic Gargle Blaster for the price of four regular Earth-drinks.
What is Disneyland? Is it Retail? Office? (shudder) Residential?
(😓Uncomfortable working-poor humour face.)
'Parks, Experiences, and Products' made up about 36% of 2019 revenue for Disney - the largest operating segment.
Find more statistics at Statista
Whatever Disneyland is, they should tell less fortunate retailers so that they too can send their mark-ups into the magical kingdom. (Actually, please don't do that.)
Could it be that beloved tales and heroes like the Avengers were just billion dollar advertisements? (Enticements? Get you in the mood before we get you in the door? Say no more? Nudge wink?)
 |
| "Tonight's special is space-bottled-water." |
OK, so that type of bricks-and-mortar retail isn't dying. The type where you die horribly if you don't take the family there to get food or booze.
Let's cut to the chase: I know what retail is dying. I'm a '90s kid who was forced to shop in malls because the internet wasn't an option. I've seen my share of boutique shops, their high prices, cranky owners, and poor range. Say you're moving all-online because the rent is zero? Fine. It means customers weren't exactly clamoring with their dollars for you to stay. The physical experience of going to see you sucked just a little less than the penalty for not doing so.
That I can get your products by mail means I never needed to see you face-to-face anyway. I am exposed to logistics REITs. They've blossomed together as online shopping fumbled its way from eBay to Alibaba. So we cool.
And if your e-business graduated from WordPress Free Tier to AWS, congrats. Anyone in an S&P500 index fund has skin in Amazon. We very cool.
Not everyone can provide sustenance like Coles or experiences like Disney. Vacating tenants make room for those who can.
Shopping centers are not inherently unpleasant. I love going to my local Westfield. It's clean, air-conditioned, and has Wi-Fi. It's constantly improving, which makes it only middle-of-the-pack. Its cousins in the rest of South East Asia are miles ahead with their facilities and tenant mix, but Japan's dated station-front ekimae-ginza/駅前銀座 will never catch up. Sure, modern shopping centers can be soulless, but 'character' is for people who've never needed a clean public toilet.
Which brings us to the question, what is 'retail space'? Is it dedicated purpose Disneyland? Is it a mega-mall that has become synonymous with a suburb like Chadstone or Arndale? Is it roadside strip dependent on on-street parking? Is it outer fringe corner shop with chicken wire across the windows? The good news is that all are evolving, but just like online retail it's going to take some time to sort out what works and what doesn't.
I wouldn't see reduced rents and vacancies as a failure. Even the desertion of entire malls can be glass-half-full.
Worst case scenario: vacant malls make room for warehouses and data centers. Maybe more advanced ones designed ground-up for automation so that facilities for humans don't have to be retrofitted out. 10 years ago I wouldn't have imagined data center REITs, yet here we are. See, land's killer feature is that it can be repurposed, perhaps even for uses we haven't thought of yet.
Land use is not limited, just as A.A. Milne takes the nursery rhyme beyond tinker, tailor, soldier, or sailor:
"Oh it's such a lot of things there are and such a lot to be
That there's always lots of cherries on my little cherry tree."
* I've new interest in land as I bought into diversified REITS. It's how I connect to the real world. Sad, really. Still overweight property but at least this time it's indirectly.
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