Real Thing or Just Her Perfume?

Much is now hyped in the real estate press about the renewed life of retail bricks and mortar.

In-store sales are enhanced by such ethereal concepts as “experiential retailing” offering a sense of community and collaboration, all branded (and personally curated no less). Buzz words are everywhere, but any actual contribution to real property value is even thinner ether. These are business marketing concepts which are unrelated to real property value.

The addition of personalization and specialized branding to the retail business models in industries such as fashion may be spectacular, and those catchy buzzwords get the message out. But the site improvements and physical components of a retail building serve both the existing tenant and next tenant, with impartiality.

What is the significance of this, particularly to less experienced commercial assessment professionals? The existence of your newly favorite retailer in the shopping center does not add to the real estate bottom line; that bump in select retail stocks does not increase market value. Nothing personal… it’s just about the rent.

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