Market disruptions are a fact of life in market economies and commercial real estate income-producing properties are exposed just like every other business in the economy. Commercial real estate market disruptions, by their very nature, are not predictable. Market disruptions are the result of changes in consumer spending preferences brought on by changes/advances in technology. In the CRE vertical this means newer living units, bigger spaces, more amenities, more efficient operations, better locations, and changes due to technology.
In the case of the CRE vertical, we have some case studies that tell us some important information about what can be done about market disruptions:
- Sears & Roebuck. Sears was the original on-line retailer before there was an on-line presence. Their mail order catalog business made them a retailing giant by the end of the 19th century and the development of enclosed shopping malls helped them hold their position in the 20th century. With the advent of e-commerce, their in-store sales market share continued to erode to the point where Sears is no longer a viable concern. The most notable decline has happened in the last 5 years until bankruptcy became a foregone conclusion. This outcome demonstrated that credit-anchored tenancy is not the bulwark of commercial retail property success.
- Emergent Care. Emergent care clinics have popped up all over America and are a favored play for single-tenant retail. Emergent care represents a technological advance in health care where emergency room medicine shortcomings are addressed by the market. The result has been a steady decline in acute care facility emergency room visits and the explosive growth of the emergent care business. This has evolved over the past 5 years into a market disruption as well.
The key seems to be that time is the issue with market disruptions. The market disrupter business model takes time to change the spending preferences of consumers and the time it takes the market disrupter to gain share is also that time that would allow for re-positioning of assets, exchange of assets or the orderly exit from the transaction before the losses become insurmountable. The INVIZEN RTS system is designed to give the CRE property lender and investor advance notice of market disruptions so that decisions can be made about how to best deploy capital in the face of our ever-changing world.
INVIZEN is the only end-to-end solution developed specifically to deal with the totality of issues facing the CRE finance, development and acquisitions market segments. Find out more by calling us today at 832.663.9634.