Even as Macy’s Closes Stores, Retail Shouldn’t be a Dirty Word in Investing

Last week, Macy’s, the largest department store operator in the country by retail sales, announced that it planned to close 100 retail stores in early 2017. According to the company, it plans to operate fewer brick-and-mortar stores and concentrate its resources on e-commerce and its better-performing assets. Macy’s is the most recent of a slew of large department stores to make this decision, joining a list of companies like Sears and J.C. Penney.

So why do we at Unison still believe strongly that retail real estate is such a strong investment? Because not all retail is created equal.

Since Unison was founded in 2010, we’ve been investing in necessity-based, neighborhood open-air retail centers. Tenants within our properties include grocery stores, which is one of the least permeable retail sectors to e-commerce, and other local stores where the local community can go to fulfill their daily needs, from post offices and liquor stores to nail salons and health care facilities. These types of stores aren’t as vulnerable to e-commerce- and in fact, as millennials flood back to the suburbs, our tenants have shown remarkable agility in the speed with which they’ve been able to adapt their offerings to meet the needs of the community, whether by offering more healthy food options in the grocery store or by adapting the store’s presence to be more experiential for visitors.
The bottom line is that retail real estate shouldn’t be a dirty word in investing. Necessity-based retail that reflects the daily wants and needs of the surrounding community isn’t going anywhere. And that’s why we feel confident that investing in neighborhood retail centers will continue to be a strong, savvy investment.