Are Consumers Ready to Return to Physical Stores? That Depends on What They’re Buying

As COVID-19 restrictions have been lifted across the United States, will consumers return to in-person shopping? The answer might depend on what kind of shopping consumers are doing.

Lucidworks, a San Francisco-based provider of software and cloud technology, recently surveyed 800 consumers in the United States and U.K. about their shopping behavior. The survey results indicate that the pandemic might have given online shopping yet another boost.

According to the survey, a third of U.S. respondents said that they plan to avoid in-person shopping as much as possible, even as pandemic-related restrictions are lifted. An additional 31 percent of U.S. respondents said that they plan to visit in-person stores less often than they did before COVID-19.

There are certain types of shopping, though, that consumers are more likely to do in-person. Lucidworks said that while 65 percent of shoppers across the United States and U.K. currently buy at least some of their groceries online to have them delivered, 63 percent said that they plan to primarily buy their groceries in person as restrictions lift.

Compare that, though, to the electronics category. Lucidworks found that more than one-half of respondents said they currently order electronics online, and only 35 percent plan to purchase electronics primarily in-person as COVID restrictions are dropped.

But how can retailers best convince shoppers to make a purchase, whether these consumers are buying online or in-person? According to the survey, product recommendations — positive reviews posted on a company’s website or on sites such as Amazon or Walmart — are key.

Lucidworks’ survey says that 85 percent of U.S. shoppers interact with product recommendations always or often. Even more impressive, two-thirds of U.S. respondents said that either every visit to an e-commerce site or often they buy recommended items that they didn’t initially plan to purchase.

A total of 68 percent of U.S. shoppers said they prefer to do research on products by reading reviews on a company’s website. Almost half of all U.S. shoppers said they research by reading reviews at third-party marketplaces like Amazon, Google Shopping and eBay.

And what about safety measures? Do consumers want COVID-era protocols to remain in place as the pandemic eases?

Again, that depends. According to the Lucidworks survey, most shoppers in the United States and U.K. want stores to operate largely as they did before the pandemic hit. But they also want retailers to retain some COVID safety measures, including physically distanced lines and contactless payments.

“The shopper inhabits multiple personas,” said Peter Curran, general manager of digital commerce for Lucidworks, in a written statement. “To create a great customer experience, you have to understand the consumer’s goal in the moment. The ability to harness first-party data and in-session inferences are the keys to delivering a great experience. Brands must connect the dots between all of the actions a shopper takes to understand their goal and deliver the most relevant experience from research, to purchase, to support and back.”

Distressed Real Estate Debt Doubles

Green Street’s Real Estate Alert reports that nonperforming commercial real estate debt on the biggest banks’ balance sheets doubled last year but remains a sliver of total holdings — dashing hopes of a buying spree for opportunistic investors, at least for now. Amid the downturn sparked by the pandemic last year, non-performing loans made up 0.86% of the commercial mortgages on the balance sheets of the 325 largest U.S. banks at yearend, up from 0.41% a year earlier, according to regulatory data compiled by Trepp Bank Navigator. The figure has remained below 1% since 2015 and is a fraction of the all-time peak of 8.6% hit in 2010. The low levels of bad debt are due in part to a host of forbearance measures implemented to assuage the effects of shutdowns enacted to curb the virus’s spread. As those accommodations expire, however, the level of troubled debt is expected to tick higher, stoking optimism that more distressed opportunities could shake loose down the road. All told, the top banks have just $15.4 billion of nonperforming loans on their books. There is another $2.1 billion of foreclosed properties, but 20% of that total belongs to just one regional bank in Texas focused on distressed loans. Meanwhile, hundreds of billions of dollars have been raised for opportunistic and distressed investing — drastically skewing the supply-demand curve and helping support property values. Click to read more at www.greenstreet.com.

Family Offices Continue to Increase CRE Allocations

Family offices control a staggering amount of wealth globally, and they have a strong appetite for commercial real estate. And although a growing number of private equity funds and sponsors are counting family offices among their investor bases, getting a foot through the door to reach those investors remains no easy task. Family offices have become a popular catchphrase over the last few years, notes DJ Van Keuren, co-managing member of Evergreen Property Partners, a private real estate investment platform created for family offices to invest together. Definitions of a “true” family office vary with the minimum threshold for wealth between $100 million and $250 million depending on the source. According to the Global Family Office Report 2019, published by Campden Research, there are 7,300 families globally and 3,100 in North America with estimated wealth greater than $150 million. “As funny as it sounds, if you get a family that is worth $50 million or $100 million, they are really just ultra-high net worth. So, it has become a bit of a loose phrase, but everyone wants to find those big whales,” says Van Keuren. “There also is a misperception on how much a family office will invest. Everyone thinks they are going to write a $15-million to $25-million check. It does happen, but it is not the norm,” he adds. Click to read more at www.wealthmanagement.com.

Towering Expectations: Subcarrier Communications Maximizes Profits from Rooftop Telecommunications

Have you ever noticed the telecommunication antennas on the top of your city’s tallest buildings and wondered, “Who takes care of those?” In many cases, the answer is Subcarrier Communications, a leading tower site management and telecommunications infrastructure support company. “We work with building owners and managers to plan for the efficient use of building rooftop space then leasing it to the telecommunications industry,” says Greg Weger, Operations Manager for the company’s Houston office. “We also handle the management of existing and future wireless infrastructure.” An important feature of Subcarrier’s services is negotiating with telecom providers on behalf of property owners. In-depth knowledge of PUC Rules and Regulations, Building Rules and Standards and industry standards are critical to protecting the properties while also recognizing the highest possible revenue. There is an abundance of contractual process involved with many rooftop tenants and fiber providers. And even after agreements are reached, there are ongoing technical responsibilities and access issues at hand. There are renewals, there is expansion of equipment, and there are escalation clauses, as well as many other technical contractual clauses to be mindful of. We monitor and deal with all of these issues which allow property managers the time needed for a myriad of other crucial tasks. Click to read more at www.rednews.com.

Logistics Firms Remain Hungry for Space

The logistics industry is having a bit of a Charlie Brown moment. After years of working to kick the football through the uprights and score big in developing fast, cost-efficient last-mile strategies, the pandemic is proving to be another game-changer. Logistics firms have benefited from a surge in e-commerce that is feeding demand for more space. At the same time, supply chains need to adapt to a huge shake-up in where people are living and working that has further complicated last-mile delivery. Amid this disruption, logistics companies are trying to solve the same fundamental issues: How do they get products in the hands of consumer or business customers more quickly? And how do they improve cost efficiencies in last-mile delivery? “We have had a number of things converging at once. It wasn’t just the pandemic, but the pandemic has shined a spotlight on several issues that were evolving,” says John Dohm, SIOR, CCIM, a partner at Infinity Commercial Real Estate in Miami Lakes, Fla. The logistics industry is dealing with advances in technology that include automation, robotics, and autonomous vehicles, as well as sensors and radio-frequency identification (RFID) codes that not only track shipping containers but track every individual item within those containers. Simultaneously, the logistics industry had to account for new and changing omnichannel delivery models, including click-and-collect and curbside pickup, not to mention the need to account for the return of goods. Click to read more at www.ccim.com.

Industrial Age: Texas Cities are Drawing Investors Looking to Capitalize on the Industrial Boom

Industrial is far and away the hottest sector in commercial real estate right now and the hottest industrial markets are scattered throughout Texas, each one creating a unique draw for investors and developers.

Houston
The largest city in the Lone Star State also boasts the most absorption of industrial space so far in 2020: just more than 6.4 million square feet. According to CBRE research, nearly 3.9 million of that got leased up just in Q2. In that same period, though, about 8 million square feet came on the market, which boosted vacancy rates to 6.9 percent. About 18 million square feet of new industrial is under construction in the Houston market with the southwest (8.5M SF) and northwest (4.8M SF) sectors bringing in the most space. “Houston is very competitive,” said Alfredo Gutierrez, president of industrial-focused investment firm SparrowHawk Real Estate Strategists. “Because of the setback in oil prices, some investors are perceiving a pullback in real estate by some of the energy companies. That provides a window of opportunity to invest in industrial real estate in Houston.” He predicts this window will close in late 2021 as the energy sector rebounds, e-commerce increases and the benefits of trade with Mexico expand in Houston.

Dallas-Fort Worth
When it comes to new construction, it’s hard to beat the numbers coming out of the Dallas-Fort Worth area. CBRE reports that in Q2, more than 23 million square feet was underway. Thing is, that space is getting eaten up as soon as it hits the market. For example, DFW had about 3.4 million square feet in completions and 2 million square feet of net absorption this spring, marking 39 consecutive quarters of positive net absorption. “I think Dallas is the strongest market in the United States right now,” Gutierrez said. “Dallas is just screaming hot.” Two of the three largest leases signed in Q3 are distribution-focused companies. FedEx scooped up about 750,000 square feet of available space, opening a new distribution center in South Dallas, while packaging and fulfillment firm AmeriPac expanded to a new 400,000 square-foot facility near DFW Airport.

El Paso
Experts agree El Paso is the market to watch as near-shoring adds production to Mexico and manufacturers are looking for convenient locations to store their goods before they’re shipped across the U.S. That’s why vacancy rates are some of the lowest in the country. Right now, only 2.9 percent of industrial space (a record low) is available in El Paso, boosting the asking rate to a record high: $5.38 PSF. To answer demand, CBRE reports 3.4 million square feet of space is currently under construction, including a new three-story industrial build-to-suit project. Another project is a 370,000-square-foot warehouse/distribution complex from Hunt Southwest Real Estate Development Co. Hunt Southwest president, Preston Herold, told the El Paso Times the company picked the border town because of its low vacancy rates, calling them “market fundamentals you want to see as an investor and developer (in real estate).”

Central Texas
While they’re not making the headlines of the other Texas markets, Austin and San Antonio are holding their own in the industrial sector. CBRE reports that strong tenant demand for distribution space contributed to Austin’s 25th consecutive quarter of net absorption. Vacancy in the capital city is down to 9.7 percent as Q3 saw no new projects delivered. The opposite is the case in San Antonio, where more than 800,000 new square feet came to market in Q3. As a result, vacancy bumped up to 14.2 percent. And more projects are on the way. Per CBRE, a whopping 1.8 million square feet are under construction.