Cross River Real Estate | Department Store Sales vs. Discount Store Sales

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses department store sales vs. discount store sales.

• Consumers are steadily beginning to show back up at malls. During the recession of a few years ago, department stores got hammered as consumers mostly went to discount outlets.
• Today’s data on same store retail sales shows a gain of 3.1 percent at department stores with sales rising 3.6 percent at discount shops. The narrowing of the gap in sales trends between the two types of stores is consistent with a better economic outlook in the minds of consumers.
• Some commercial real estate investors have been buying up strip malls by borrowing from the bank at a 3% rate. Provided the strip mall gives, say, a 7% cap rate (rental income divided by purchase price), that is an easy 4% into the bottom line. Now, some investors may want to seek out mall purchases that yield good cap rates since there is a revenue recovery in department sales.

Lawrence Yun, Chief Economist

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.