Fake News and the Death of Retail as We Know It
‘If you don’t read the newspaper you’re not informed, if you do you’re misinformed …what is the long term effect of too much information? it is the need to be first, not necessarily true…”
In August 2016 I published ‘On Trump, Brexit and Predictions’. No, I had no idea Trump would win the election, and no, I do not belong to a secret clairvoyant society. I wrote the piece because a lot of smart people missed what was happening around them. Some still are.
Moments before the largest Real Estate conference @ICSC .Here are a few quick takeaways from 2016 that may help you get through 2017…
Yes, We Are All Misinformed
Fake news has always existed. In its new iteration it tracks our facebook circles, dinner tables, tweets and emails. You can blame the media all you want, but we’ve also changed; in the era of information overload, how we source, process and act on information is materially different than it was 5–10 years ago. News has changed, but so has its audience. If you are going to get a handle on things, be methodological about your information — sources matter and there is an increasing amount of ‘noise’ out there.
The Death of Retail
Video killed the radio star, then came iPods and Spotify. Yet Video still lives.
Will driverless cars eliminate congestion and change transportation patterns forever?
Will Amazon and e-commerce kill department stores, malls and urban retail?
…surely the emergence of broadband internet, VOIP, video and network connectivity will turn office buildings obsolete allowing remote access for employees to work from the comfort of their homes…
Has internet and broadband technology destroyed the need for office buildings?
Two decades ago you heard a lot of this-
Rumors of retail’s demise are greatly exaggerated
The reality, as always, lies somewhere in between these two opposing positions. From a real estate investor’s standpoint there is no doubt retail, as an asset class, is changing. But transformation is not death. Just as the industrial sector morphed to better serve Amazon’s “last mile” strategy, office buildings changed their DNA to better serve the changing workforce. Retail too will have its moment. Tertiary strip malls may morph into grocery anchored centers, paintball arenas razed to the ground for residential development and parking lots. On the flip side, a well located mall will have the opportunity to become a lifestyle center.
I tend to pay extra attention to an entire sector when it get penalized by Wall St., usually therein lies the opportunity. Real estate has and always will be a game of timing and location but the most important factor is sapiens. The internet did theoretically threaten office space but that theory did not account for human interaction. People need interaction and collision to be productive. Friction creates heat. Workforces are synergistic for that reason. So-much-so that communal concepts like WeWork and others are the talk of the town.
Yes, Amazon will shop for us and supply our groceries, commodities and clothes, without asking us to leave our living room. But what about experiences? human interaction? collision? where will go for that?
A Tale of Two Cities
The retail evolution will separate the obsolete from the opportune. If you can envision the latter and identify those opportunities you may gain an edge and create substantial value as an investor. Some department stores will shut down, some will reinvent themselves others will transform into trendy food halls. Retailers may leave as other concepts or trends arrive, if they don’t- it may be time to consider a residential development…
Distinguishing Fake from Real
“We find ourselves unable to predict what will happen; yet, after the fact we explain what did happen with a great deal of confidence. . . It leads us to believe that there is a less uncertain world than there actually is.”
“ The Undoing Project “ — Michael Lewis
Ladies and Gentlemen- uncertainty and unpredictability are alive and well. The US election, the Patriot’s SuperBowl, the Dow Jones’s miraculous post election surge- everything is unprecedented these days. No one can predict the future but if you stay true to understanding how things change, identifying true sources, questioning herd mentalities and sometimes ignoring the crowds- you may gain a much needed edge.
Clearly Wall Street’s obituaries of mall REIT’s, suburban malls and retailers in general are premature. Media will often portray industry shifts as death, when they are actually an evolutionary process.As Victor Hugo once said- ‘ The future has many names. For the weak-unattainable. For the fearful-unknown and, for the bold-ideal.’
Originally published at https://www.linkedin.com on May 19, 2017.