I’m a (typical?) guy who hates to shop, which is why my wife is both amazed and puzzled by my newfound shopping sprees. No, I’m not talking about buying the latest fashion like “I gotta have that new Michael Kors jacket at Macy’s,” but something different. Every day I come home from work to newly delivered boxes, lots of boxes, and shifty wife eyes. “What did you buy now?” she asks me.
See it’s not that I hate shopping. It’s that I hate getting in my car. I hate driving. I hate having my time consumed by walking around in stores, and I hate going to different stores to find the best price, which means more driving in my car (Get it? Vicious circle.). But now I don’t have to shop in bricks-and-mortar stores for “commodities.” In every case when I know what I want, I buy it on the internet at the best possible price. Plus I can buy obscure stuff that’s hard to find. (Can you say 13-year-old fan motor for our bathroom? Done, thanks to mrsupply.com).
I consider myself pretty typical. So if I extrapolate, a lot of people are migrating to internet shopping and not as many people are shopping in bricks-and-mortar stores. This is not a revelation. It’s been written about a lot in the press, but I am my own best example.
This trend makes underwriting retail CMBS conduit loans tricky. Malls used to grow net operating income (NOI) like clockwork, rolling over to bigger loan amounts at each refinancing, but NOI growth has stopped. Many malls and shopping centers are struggling. Whenever I need a dose of retail reality I head to deadmalls.com and deadanddyingretail.com. It’s fascinating stuff – if you’re in the lending business!