Commercial Real Estate Investors Not Shying Away From Retail Despite Companies Like Bed Bath & Beyond Closing Stores

With concerns over rising interest rates and inflation, tighter financial conditions and what some believe is the threat of a recession this year, commercial real estate (CRE) investors are apparently not shying away from retail.

CBRE Group forecasts that 2023 investment volume across all property types will be down 15% from 2022, with increased activity expected in the second half of the year when the CRE services and investment firm believe interest rates and economic conditions will stabilize. 

CBRE believes the most sought-after sectors remain multifamily, particularly apartment complexes, and industrial, led by modern logistics facilities in major markets. But retail remains a lure despite anchor companies like Bed Bath & Beyond Inc. BBBY shutting their doors. The company confirmed last week that it’s closing more stores as it considers filing for bankruptcy protection. Bed Bath & Beyond, which also operates buybuy Baby and Harman Stores, released a list of 120-plus closing stores, which includes 62 new Bed Bath & Beyond closings in addition to the 56 announced in September. 

Despite, or maybe because of, recent merger talks, the most popular retail segment for investors is grocery-anchored shopping centers. And that is helping retail investors hold the line on their strategies in 2023. According to a recent survey from London-based investment insight platform Finimize, most plan on investing the same or more in retail. Only 1% of retail traders say they plan to sell off their investments in 2023, and 29% plan to add to their portfolios.

“This data is proof that even in the current market environment, the majority are seeing volatility simply as part of the economic cycle thanks to access to information and growing experience with investing,” Finimize CEO Max Rofagha said in a company press statement. “Additionally, it is clear that the retail investor narrative is changing. For example, previously there has been a focus on how a tiny population of day traders is behaving.”

Finimize’s survey of more than 2,000 retail investors across Europe, Asia and the U.S. found that over 80% of retail investors think the worst of the stock market rout will be over within six months. 

Even with the collapse of Sam Bankman-Fried’s FTX crypto exchange, 38% of retail investors surveyed are planning to invest in crypto this year. 

The retail investment community is predicted to account for 61% of all assets under management globally by 2030, up from 52% in 2021, according to wealth management strategy consulting firm Indefi.

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