Retail space disappearing, giving way to more residential

Discussion in 'Economics & Trade' started by kazenatsu, Jul 30, 2020.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    34,640
    Likes Received:
    11,210
    Trophy Points:
    113
    I've been noticing a trend in the economy - a very worrying one. I have been noticing retail spaces have been disappearing, and yet, at the same time, there is more high-density housing being built.
    Obviously this has only been happening in response to changes in demand.

    It's very paradoxical, isn't it, that there would be fewer businesses but more housing being built.

    But I think I have an explanation. There are more people than there were before, but these people are poorer with less money. And not only that, but a larger percentage of their individual household incomes are going to paying for cost of housing, since housing prices have gone up. As a result, there are fewer businesses.

    At one local mall, they are planning a redevelopment, where the mall will only have half as much retail stores as it did before, but the other half will be turned into high-density residential apartments. (Many in the neighborhood are opposed to the plan, since they are concerned about more congestion on the roads)

    I have constantly seen local businesses struggling, vacant spaces.
    Which is highly unusual because there is also a housing shortage. There's basically not a single vacant apartment, condo, or house; they all fill almost immediately.

    Some people will blame Amazon, but keep in mind Amazon only accounts for 5 percent of the total retail spending in the US, and of course there are many services from local businesses that can't be replaced by online retail (restaurants, beauty salons, pet stores, etc).

    I think the coronavirus pandemic and government-imposed shutdown is only going to accelerate this trend, which has already been going on over the last decade or so.

    And these new high-density residential spaces are not cheap. I mean, when new buildings have to be constructed, they have to recoup the costs, as well as there being a rental premium because it is a new space. It seems most of the people filling these new spaces are immigrants, crowding together, because they have few other options. The living spaces inside each unit are not very big.

    It almost feels like things are dying economically. Yet all sorts of apartment buildings have gone up, jam packed right up against the side of major roads because there wasn't enough space to build them anywhere else, and things are more crowded.

    Like things have undergone a transformation, and not for the better.


    related threads:
    As retail store closures continue to unfold, will have big effect on the U.S. economy
     
  2. cristiansoldier

    cristiansoldier Well-Known Member

    Joined:
    Apr 24, 2014
    Messages:
    4,999
    Likes Received:
    3,428
    Trophy Points:
    113
    The 80s style mega malls have been dying for years. You should check out some you tube videos on dead abandoned malls. There are also many video documenting the decline of the American shopping mall.

    Online shopping is probably a major factor. You mentioned Amazon but every major retailer from Best Buy to Walmart all do major online sales.

    The other major factor is social change. Teens who use to crowd to mall to hang out and meet up now have social media. In our city and suburbs you see a lot of new urban style development where they build high density living in tall condo building and surround these building in their own little villages with shops, restaurants, gyms, theaters etc... I was skeptical about these developments when they were going up but I find them quite enjoyable. The selection of restaurants, bars and shops are nice and the high-end feel of the area is very pleasant. The entire area is centrally designed by the developers and offer a nice combination of urban living with pockets of greens space and walking areas. We often go to have dinner or meet up with friends for coffee or drinks. It kind of gives you the downtown feel in the suburbs with the sushi restaurants and desert shops.

    To be honest we still have a pretty big mall around us with about 200 stores but we rarely visit it anymore. Maybe 3-4 times a year.
     
  3. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    34,640
    Likes Received:
    11,210
    Trophy Points:
    113
    People keep saying that. And no doubt that is indeed a factor. But I still strongly suspect declines in overall consumer spending is a larger part of the reason.

    I suspect online retail has been acting as a red herring, distracting people from seeing what has really been going on.
    When people see all these stores go out of business, they are just automatically assuming it must all be due to online shopping. Because it's psychologically easier for them to comprehend that then consider the other more troubling possibility.
     
    Last edited: Jul 30, 2020
  4. MJ Davies

    MJ Davies Well-Known Member

    Joined:
    Jun 4, 2020
    Messages:
    21,120
    Likes Received:
    20,246
    Trophy Points:
    113
    Do you have any information that suggests spending has declined versus just been transitioned to online shopping? Consumers are probably still spending. They just aren't doing it in traditional malls as much.
     
    Last edited: Jul 30, 2020
  5. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    34,640
    Likes Received:
    11,210
    Trophy Points:
    113
    I did cover this in that other thread that I linked to.


    Here's a link to another article as well:
    https://theconversation.com/death-o...ts-to-do-with-a-dwindling-middle-class-121499
     
    Last edited: Jul 30, 2020
  6. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    34,640
    Likes Received:
    11,210
    Trophy Points:
    113
    quick napkin paper calculations

    total US retail sales 1992: 1811 billion (equivalent to 3243 billion adjusted for inflation in 2018 dollars)
    total US retail sales 2018: 5269 billion

    US population in 1992 was 256.9 million
    US population in 2018 was 327.2 million

    sources:
    https://www.statista.com/statistics/197576/annual-retail-sales-in-the-us-since-1992/

    https://www.in2013dollars.com/us/inflation/

    3243 billion divided by 256.9 million = 12,623 per capita
    5269 divided by 327.2 million = 16,103 per capita

    Well, this really rough calculation actually seems to suggest that the amount of consumer spending on retail went up.


    "In 2018, e-commerce accounted for 9.9 percent of total retail sales in the United States"

    source: https://www.statista.com/statistics/187439/share-of-e-commerce-sales-in-total-us-retail-sales-in-2010/#:~:text=In 2018, e-commerce accounted,utilized among all age groups.


    So why does it seem that so many retail stores have gone out of business?
    Something isn't adding up here.
     
    Last edited: Jul 30, 2020
  7. cristiansoldier

    cristiansoldier Well-Known Member

    Joined:
    Apr 24, 2014
    Messages:
    4,999
    Likes Received:
    3,428
    Trophy Points:
    113
    You ignored the second part of my post on social change. I think the retail business that you are looking at are businesses that did well in the past but have not adjusted well to consumer changes. What the boomer generation and my Gen X generation spent our money on differs significantly than what Millennials and Gen Z spends their money on. We spent money on cars and vehicles they spend money on Uber, Lfyt and car sharing services. We eat out to satisfy hunger and treat yourself to something different they dine out for the experience and social interaction. We bought a ton of useless goods and they buy experiences. There are a lot of new businesses making lots of money but you are probably looking at the ones from our time that did not adjust to the new type of consumerism.

    I work in IT and we pay our starting programmers a very decent wage starting around 60-70k. When I talk to these young programmer very few of them own cars and many do not even bother to get a DL. I remember rushing out to buy my first car soon as I got my license when I was 16. When I got my first job my first big expenditure was purchasing a brand new Ford Mustang GT. They have no dreams of owning a home. Some will buy condos but the majority prefer to rent. They think they believe it gives them the flexibility to move try new experiences or work opportunities. They are still spending money and many are going in debt to spend money, it is just they are spending their money on different things.
     
    Last edited: Jul 30, 2020
    roorooroo likes this.
  8. FreshAir

    FreshAir Well-Known Member Past Donor

    Joined:
    Mar 2, 2012
    Messages:
    150,187
    Likes Received:
    62,819
    Trophy Points:
    113
    I do feel for the young nowadays, housing price have increased, but the beginning wages have not kept up

    not to mention jobs are not as permanent as they were when I was growing up, they are more temporary now with less chance of advancement and more jobs like manufacturing, customer service and IT jobs going overseas

    all this combined with a growing population is not good
     
    Last edited: Jul 30, 2020
  9. wgabrie

    wgabrie Well-Known Member Donor

    Joined:
    May 31, 2011
    Messages:
    13,830
    Likes Received:
    3,054
    Trophy Points:
    113
    Gender:
    Male
    I saw this news article a few weeks ago, I know it's old news from 2019, but I think it might be related to this topic:
    Millennials are the biggest — but poorest — generation
    https://www.cbsnews.com/news/millennials-have-just-3-of-us-wealth-boomers-at-their-age-had-21/
     
  10. Chrizton

    Chrizton Well-Known Member

    Joined:
    Aug 4, 2020
    Messages:
    7,707
    Likes Received:
    3,785
    Trophy Points:
    113
    I don't think you are correct but not saying it is an unfounded assumption. Walmart spends a king's ransom studying consumers and what they do or do not prefer and how that is changing over time. The reason the are experimenting with Walmart grocery only stores and some drive through Walmarts is because they tapped into early the trend that a lot of consumers, particularly the elderly and mom's with kids in tow that once liked one-stop everything under one roof now hate it because the stores are too big and involve too much walking. That dynamic surely would apply to malls as well.
     
  11. kazenatsu

    kazenatsu Well-Known Member Past Donor

    Joined:
    May 15, 2017
    Messages:
    34,640
    Likes Received:
    11,210
    Trophy Points:
    113
    Ironic, because many of those shoppers at Walmart could use a little walking...
     
    wgabrie and Chrizton like this.

Share This Page