Over the past 60 years, Walmart has become the largest corporation in the world, a mega seller of affordable products that are found in homes worldwide. Whether they shop for cheap goods out of necessity or thriftiness, Walmart is a prime destination for frugal consumers.
Today, however, the company doesn’t stand unchallenged among the hierarchy of bargain retailers. Competing for its customers are dollar stores that have posted excellent numbers in spite of—and partly because of—the recession: Dollar General, Family Dollar, and Dollar Tree.
While Walmart would seem to have the market cornered on low-priced, everyday items such as cosmetics and foodstuffs, the business model of dollar stores has helped them thrive in the shadow of the retail giant—so much so that the properties that dollar stores occupy have become some of the hottest purchases for commercial real estate investors in Texas. If you are looking for commercial real estate investment property in Texas that yields a dependable return in the form of rental income, buying investment properties that major dollar stores occupy is an excellent option.
THE VALUE OF A DOLLAR
While Walmart is dedicated to offering low prices, dollar stores are devoted to selling goods for a dollar or less. From a marketing perspective, this definitive commitment to selling goods for cheap, as much as the savings that the low prices generate, is what draws shoppers to the aisles of dollar stores. As REIT investment expert Brad Thomas writes in Forbes:
When it comes to retail and convenience, there is not one leader that dominates the ‘law of focus’ but instead an entire category is differentiated by one simple but self-described word: ‘dollar.’
Dollars stores have carved out a niche in the retail industry by taking bargain shopping to the ultimate level. Instead of wondering whether other retailers offer something for a lower price, shoppers at dollar stores know they are getting the best price. Consequently, they confidently open their pocketbooks for anything the stores sell. This consumer confidence has led to major dollar stores becoming some of the top earners in the S&P 500, and has thus made buying investment properties where the stores are tenants one of the surer bets in the Texas real estate investment property market, especially in a down economy.
MAKING THE RIGHT DOLLAR STORES INVESTMENT
Buying investment properties in Texas that dollar stores occupy is a great way to acquire valuable property that houses valuable tenants. However, several factors affect the long-term worth of the investment, such as the terms of the lease, the time remaining on the lease, and the design of the property, to name a few. At Westwood Net Lease Advisors, we use our real estate expertise and proprietary database of on-market and off-market properties to help Texas investors acquire dollar store properties that have the right characteristics for their investment goals.