Virus, Recession, and Dysfunctional Government Devastate Commercial Real Estate Industry

If you haven’t been to a mall recently, you are missing out on witnessing a fundamental change in the retail industry.

Stores are closed, and their inventory is off the shelves, especially for more expensive items, or locked behind gates.  For stores that remain open, access is limited, and employees are stationed outside to admit people.  Most everyone was wearing a mask in the malls I visited.

Based on visits to four major malls in my area, including two of the largest grossing malls in the nation–Sawgrass Mills and Aventura Mall, both in Florida–these changes were evident.  After the COIVD subsidy checks were spent, shop workers said traffic declined significantly. Shopworkers said the malls were dead during the week.  The only stores that had any activity were those holding sales of at least 50% off. The luxury shops (Gucci, Fendi, Jimmy Choo, Von Furstenberg, Burberry, Chanel, Hugo Boss) remain open, but with little traffic.

In mall management, the parts are greater than the whole, so when the parts don’t bring in the revenues, the whole mall suffers. This is what we are seeing today.

Office building are also suffering as businesses realize their employees can work remotely. Gig workers, who were never stable customers in the first place, should also disappear from We Work-type office spaces as that business model goes into the scrap heap.

The graphics and story below focus on the serious decline in commercial real estate, including malls and office buildings. This real estate sector is suffering from the triple whammy of the recession,   the COVID virus, and a dysfunctional political system led by a sociopath president.  There is no escaping those conclusions. Combined, all this means that commercial real estate, the core engine of consumerism, is in serious trouble.

What is clear is that the malls a decade from now will look dramatically different than they are today. There will be fewer of them. Those that remain will have a residential component and smaller stores, many of them seasonal or temporary.

For more details on how commercial real estate is being devastated by this combination of factors, click on the chart below.

Commercial Mortgage Delinquencies Near Record Levels

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Chuck Epstein

Chuck Epstein

Chuck Epstein has managed marketing communications and public relations departments for major global financial institutions and participated in the launch of industry-changing financial products. He also has written by-lined articles for over 50 publications, five books and served as editor and publisher of nation’s first newsletter on the topic of using the PC for personal investing and trading. (“Investing Online, 1994-1999). He also is a marketing consultant, writer and speaker on topics related to investor protection and opportunities in the very dynamic cannabis industry.

He has held senior-level marketing, PR and communications positions at the New York Futures Exchange, Chicago Mercantile Exchange, Lind-Waldock, Zacks Investment Research, Russell Investments and Principal Financial.

He has won national awards from the Mutual Fund Education Alliance (MFEA) and his web site, www.mutualfundreform.com, was named best small blog in 2009 by the Society of American Business Editors and Writers (SABEW).

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