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Real Estate
A real problem for real estate?
Shift to e-commerce has hurt retail REITs in U.S. more than elsewhere
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Consumers are shopping more online, which has not only hurt retailers but also property owners, including retail real estate investment trusts (REITs). The industry has struggled broadly, but U.S.-based companies have been hit hardest. Over the last five years, the U.S. Retail REITs industry has lagged the MSCI USA Index by 85%. In contrast, similar companies outside of the U.S. have trailed the MSCI World ex US Index by only 27%. International retail REITs have been more resilient for a couple of reasons. International consumers don’t shop online as much as they do in the U.S. And European department stores don’t anchor shopping malls – meaning that the malls aren’t as reliant on successful department stores to maintain foot traffic. The industry remains pressured both in the U.S. and abroad, but ultimately the long-term outlook for any individual REIT depends on its portfolio of properties. Investors should consider a bottom-up approach to research, which may help uncover companies with better prospects trading at attractive values.
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