Are REITs a Good Investment?

Posted by on October 24, 2019 in Stuff with 0 Comments

REITs are shares of real estate investment trusts (REITs).  They have struggled in recent years due to these sorts of shops closing.  Many people find online shopping more convenient. This means that the older version of shopping has been strained. We saw this coming decades ago and there really wasn't any way to stop it.  However, some of the major retail giants refused to believe in and get on the online shopping bandwagon until it was literally too late. They were struggling to get a proper website and hold down their stores, which eventually caused a lot of bankruptcy and retail giant collapses.

When it comes to investing, you should really know what you are investing in.  What is your passion but also what will do good for your portfolio? There are companies that you can hire that work on nothing but investing for other people.  These people study this and incorporate your desires into your portfolio. However, if you want to take more charge or just understand your investment better. Investments come in all forms and shopping center REITs is one of these forms.  There are also green investments and investments in gold or silver as options. Of course, there are all of those bitcoin type investments as well. So, understanding what type of investments you are interested in or even partaking in with your investments could be interesting.

Shopping center REITs

Shopping Center REITs are just as they sound.  They are real estate investment trusts that people buy into as an investment.  Shopping centers REITs are just like other investments with their highs and lows.  However, the trend of the closed shopping centers and malls should have you looking more closely at this sort of investment.  In 2018 retail sales were finally back up since 2012. However, the REITs did not see this affect their investments in a positive way.

Shopping center REITs represent only 7% of all the REITs in the US.  These are basically in three different sectors such as grocery-anchored centers, power/strip centers and street-level urban retail.  Grocery store centers have pretty much held their own while ecommerce was eating some of the big box stores, which are in power centers category alive.  The REITs have tried to be proactive during the e-commerce boom and mix things up so that they were still valuable to invest in.

People are moving to Urban

However, there are other economic trends that should be considered and the brick and mortar concepts are still very much alive for some.  Most people of the younger generations are moving to urban areas and are not even considering rural areas. There are still areas in the US where standard high-speed wifi doesn't exist.  These areas are not appealing to the younger generations and people are fleeing in hoards to the urban areas. With this is a surge of people that will have retail needs and want the instant gratification of these needs.  There will be a need for medical supplies and gas for their cars. These needs are not something you can buy online and wait two days. They need these things now, today. And, that is where we are going to see a surge in the brick and mortar industry.

Shopping center REITs are going to have to diversify a bit and look at the bigger picture.  The retail environment is changing. The entire way we shop is changing and we have seen this coming since the early 2000s.  Being online and having ecommerce as an option is big. And, in recent years Congress has opened up sales tax options for online stores, which will stomp out what percentage you might get off for shopping online vs the store.

Economic Changes

Postage and shipping are expensive and so are the infostructures and warehouses of some of the bigger online stores.  However, year after year they are working to improve this and they will not stop. Sure, they say “Free Shipping” but that is definitely into the cost of the product in some way.  They are getting better and mainstreaming the shipping and logistics. But, there is something to be said about going to a store and trying on products. Browsing with your friends and family and enjoying seeing and touching the things you intend to buy.

The future is coming where we literally can have just about anything delivered to us.  Gone at the days to choose between Chinese and pizza. There are entire companies that are offering these delivery services and people working for them independently.  The apps on our phones are forever improving and the ways we buy are changing so why wouldn't the shopping center REITs? It would only make sense that the options within the shopping center REITs would have to change to remain competitive in today's market.

People are still going to need their coffee shops.  The pharmacies are always going to be there, for now at least, until there is same-day drone shipping.  Which is not in the far future. But, people are always going to want to shop from time to time. And, if the people are invading the urban areas, the population will increase and so will the need.

Brick and Mortar is still alive

People are always going to want places to go out to eat and enjoy the company of their friends and family.  People will always love to browse and buy in the little shops and stores in quaint towns. The malls are a wonderful gathering place for teenagers and young parents.  However, the landscape is changing and the shopping center REITs are as well. This is important to ensure they are still good investments.

Remember these are put together by investors that want to give you a good return on your investment.  They understand the market better than most average citizens and are certainly aware that there is grocery delivery in the urban areas, as well as laundry, just about any kind of food and so much more.  You can order up a driver to take you or your children places with the touch of a few buttons in an app. These modern-day conveniences are changing how we spend our time and our money. And, economists are very much aware of this.

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