The growth of internet commerce is reducing the square footage of real estate that retailers can profitably utilize. This dynamic should help increase the supply of middle-class single family homes in some desirable markets because it will help address the dearth of buildable lots that home builders point to when discussing the small supply of affordable new single family homes.
As the chart below shows, retail sales are inexorably shifting to the internet from stores. (Chart Courtesy of bizjournals.com and Ten-X Real Estate.)
The latest monthly employment report from the Bureau of Labor Statistics shows that retail is down 87,000 jobs this year, demonstrating that e-commerce is resulting in a direct cannibalization of store-based retail.
This cannibalization is also steadily affecting the square footage of real estate devoted to retail. (Chart Courtesy of bizjournals.com and Ten-X Real Estate.)
Some experts predict that about a third of middle-market large malls and strip malls will eventually go dark by the end of the next recession.
Not all of this space will be appropriate for single family housing, but property owners in need of revenue will certainly be incented to find some alternative use for this already developed land. Municipalities in need of property tax revenues will be incented to assist property owners in this regard.
It remains to be seen how big an impact all of this will have on single family housing. What is clear is that there is a large supply of already developed lots looming on the horizon and many municipalities will be well-served to help see that it gets utilized at its highest and best use.