I am intrigued by the role of Private Equity in the ongoing fall or Retail; I don’t believe it is well understood, either in sheer volume or in any sort of context.
Anecdotally (yes, I know) I have heard tales from people in the business who suggested that empty store fronts in otherwise fully occupied buildings in healthy neighborhoods often have OE behind the building’s finances.
When researching that column, I found a discussion by Dror Poleg that I found intriguing:
Technology is undermining the foundations of real estate value. No asset is safe: Office buildings in midtown Manhattan are under attack by WeWork and Knotel; stores on 5th Avenue stand empty due to online competition and changing consumer preferences; and hotels next to Disney World are threatened by AirBnB’s partnership with a local developer.
This means that Core assets are no longer as risk-free as they seem. The assets are not worthless, but their operation now requires more effort and expertise — dealing with shorter leases, offering new value-added services (furniture, community, yoga…), operating specialized software and devices, and fending off disruptive competitors.
Check out the entire discussion at Medium.