by Justin Spittler, Casey Research:
A new real estate crisis has begun.
You might find that hard to believe. After all, the government put out all sorts of laws and regulations after the last housing crisis. These measures were supposed to protect us from a repeat of the 2008–2009 financial crisis.
Plus, U.S. housing prices are rising, not falling.
But I’m not talking about the housing market. I’m talking about retail real estate.
On Friday, I told you about a major crisis that’s ripping traditional retailers to pieces.
To recap, Americans aren’t spending money like they did in the old days. They’re going to malls and department stores less often. They’re doing more shopping online.
This is obviously bad news for retail and apparel companies. It’s also killing companies that own and operate retail real estate.
I’ll explain why in today’s Dispatch. I’ll also tell you what real estate stocks to avoid at all costs.
But first, you need to understand why this key pillar of the real estate market is toppling over…
• The United States has too much retail space…
Look at the chart below.
It shows the amount of retail space per person in the United States and six other major countries.
You can see that the U.S. has twice as much retail space per person as Australia. It has more than four times as much retail space as the United Kingdom.
This wouldn’t be a problem if demand for retail space was high. But it’s not. In fact, it’s plummeting.
• America’s biggest retailers are closing stores by the thousands…
As we told you on Friday, U.S. retailers have already announced plans to close 1,500 stores this year.
Major department stores are a big reason for this…
Macy’s, the largest U.S. department store, has plans to close 68 stores.
J.C. Penney, another major department store, plans to shut down 130 to 140 stores in the coming months. Meanwhile, iconic American retailer Sears wants to close 150 stores.
This is a major problem.