Should You Invest in Club Store Commercial Real Estate?

As a shopper, you might be intimidated by warehouse clubs because of their sheer size and selection. But as an investor, there are plenty of good reasons to invest not only in warehouse club stocks, but also in the real estate businesses that house these companies. Here’s why.

A clear pandemic winner

Warehouse clubs thrived during the pandemic for a number of reasons. First, because they were essential retailers, they weren’t forced to close early like so many non-essential businesses did.

Additionally, their attractive price points and massive layouts made them a go-to destination for consumers who not only wanted to supplement their income at a time when the economy was hitting bottom, but also wanted to shop in a way that encouraged social distancing. Also, buying in bulk allowed consumers to make fewer trips to the store, thereby limiting their exposure to COVID-19.

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Now, warehouse clubs have an excellent opportunity to capitalize on that success as the pandemic continues and COVID-19 waves (and variants) continue. In fact, consumers who started shopping at warehouse clubs during the pandemic specifically prefer this option during periods of higher caseloads.

And that doesn’t just apply to COVID-19. Warehouse clubs could see an uptick in business each year during flu season if consumers remain sensitive to health concerns. That alone makes them a viable business and a steady source of income for malls. But there are a few other reasons why club stores continue to thrive.

An everyday solution to supply chain problems

It’s no secret that delays in the supply chain have created a shortage of stock, leading consumers to scramble to get their hands on many of the staples they rely on. And while some of those backlogs have eased since late 2021, they’re still a concern.

Warehouse clubs help solve this problem by allowing consumers to bulk-load the items they need. Therefore, there is a good chance that Warehouse Club membership will increase in the near future as consumers continue to realize the importance of stocking their homes with essentials.

relief from inflation

Inflation has been rife for months, so now more than ever it’s important for consumers to save on basic groceries. Warehouse clubs are known for being competitively priced, and that alone is enough to make them a mainstay not just in the short term, but also when the cost of living drops again.

Not much competition

While warehouse clubs naturally compete with each other, as do supermarkets and big-box stores, they also tend to be fairly widespread. That alone lowers the risk of store closures due to too much competition.

Stable anchor tenants

Like malls, malls often rely on anchor tenants to attract shoppers and smaller tenants alike. And just as department stores serve this purpose for shopping centers, warehouse clubs also serve this need for shopping centers.

A solid investment

If you’re interested in investing in real estate, it’s worth checking out properties that house warehouse clubs. While it’s true that many people have joined a warehouse club just to survive the pandemic, the reality is that these businesses are addictive to some degree. Once you get used to buying your favorite household items in bulk at a discount, it’s hard to give up. So there’s a decent chance that Warehouse Club membership rates will remain strong and stable for many years to come, making these properties a very solid bet from a real estate standpoint.