Will Restaurants Save the Mall?

As retailers including Macy’s and JCPenney announce store closings and layoffs, the future of retail real estate may look bleak.

But a report from Reis, Inc., “Is the Retail Real Estate Industry Doomed?” could give landlords reason for optimism. “Sales at electronic shopping and mail-order businesses grew by $169 billion from 2010 to 2015,” it notes. “However, sales at restaurants and drinking places grew by a comparable level – $155 billion. In other words, spending at restaurants and drinking places offset 92% of the retail lost to ecommerce sales.”

The jump in restaurant sales is also driving a larger increase in jobs than the ecommerce boom has.

“From 2005 to 2015, ecommerce sales grew by $257 billion or 146%, yet the industry only added 102,000 jobs for a growth rate of 43%,” the Reis report finds. “Sales at restaurant and drinking places grew by $225 billion, or 57% from 2005 to 2015, yet employment grew by 1.94 million jobs, or 8.6 jobs per $1 million of sales vs. 0.4 jobs per $1 million in ecommerce sales.”

The report ends optimistically: “Will the eating out and other services-spending trend keep retail spaces occupied? The steady growth patterns shown above suggest that, yes, this trend should continue as long as job growth stays positive.”

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