Bricks and mortar retail is living on borrowed time
The long lines that have appeared outside reopened retail stores will not be enough to stave off the inevitable crisis in commercial real estate.
Most financial crises are either seeded in the real estate market or are amplified there. The current one began as a healthcare emergency and has rapidly morphed into a financial shock, but its legacy will perhaps be the most profound in the real estate market.
As in so many sectors, the Covid-19 lockdowns across the world have only served to accelerate technological and behavioural changes that were already under way in the retail, hospitality and office space sectors.
The implications of social distancing and hygiene measures to contain the virus were almost immediately apparent to investors: the largest US retail real estate investment trust (Reit), the Indianapolis-based Simon Property Group, lost 68% of its share price value between Feb 21 ($142.25) and March 18 ($44.92).