There might be some in the multifamily sector of commercial real estate sector that are nervous about a potential housing recovery. The answer is simple: If more people are buying homes, the less demand there is for apartment rental.
But if that recovery does take place at some point in the near future, one commercial real estate sector that will benefit is retail.
In an interview with GlobeSt.com, Auction.com’s economist Peter Muoio, points out that the more houses are bought there is an increased demand for home-furnishings goods, furniture and similar products.
On top of that, more home buying means greater wealth. Greater wealth equates to more people shopping.
Right now the retail part seems to be working out, but the housing portion of the equation still lags.
Consumer spending isn’t exactly tearing it up right now, but things are improving. The Commerce Department just reported that seasonally adjusted consumer sales were up 0.4 percent in June, following a 0.3 percent push in May.
Luxury retail seems to be doing well. Michael Kors had a great fiscal first quarter. Meanwhile, the National Retail Federation predicts retail sales to rise 3.9 percent for the remainder of 2014, only a tad lower than its 4.1-percent prediction it had earlier in the year.
Unfortunately for housing, the industry has tapered off. Home construction fell 9.3 percent in June, the second-consecutive month it has dropped, bringing the worst results since September of last year.
However, if it does bounce back, there’s a chance we could see retail skyrocket.