Since everyone wants to talk about the retail apocalypse, lets talk about the retail apocalypse – and how you can benefit from it.
It’s not by buying up every bit of Amazon (AMZN) you possibly can. Nor is it by shorting Tanger Factory Outlet Centers (SKT), Simon Property Group (SPG), or Taubman Centers (TCO).
Those three mall and shopping center real estate investment trusts, or REITs, are doing just fine anyway. They’re not just surviving the various store closures that come their way. They’re managing them like the pros they are.
Believe it or not, brick-and-mortar retailers aren’t going the way of the dodo just yet. And the best of the best REITs that host so many of them are adapting just fine.
They’re even growing.
It’s true that other mall REITs are struggling. If I had to make a bet, I’d say some of them will go so far as to flat-out fail. They didn’t run the tightest ships during good times, so now they’re paying for it in “bad” times.
But that’s enough of that. You didn’t click on this article to read more about mall REITs. You’ve either taken my advice about which ones to purchase and which ones to avoid… or you want to avoid the sector altogether.
Either way, you want to buy into something else: something more “advanced.” Something more technologically minded.
In which case, you’ve come to the right place. We’ve got three future-focused properties ready and waiting to show off what they’ve got.
And what they’ve got is making some money.
The Power of Cell Towers
The reason why I’m labeling these tech REITs as a trifecta is because they end up working hand in hand. One really can’t operate without the other.
Let’s start with cell tower REITs, which fall under the infrastructure category of real estate investment trusts. They play an enormous role in our culture and commerce today, yet most people don’t think about them twice.
They probably don’t even think about them once.
That’s because their customers – telecommunication companies such as Verizon, AT&T, and Sprint – are much more prominent in people’s minds. Often, admittedly, that’s for negative reasons, such as service charges… service outages… service annoyances… and, of course, their infamous customer service.
Or lack thereof.
It seems like everyone has a horror story when it comes to their carrier. For my part, as the father of five kids, I know I pay my provider much, much more than I’d prefer.
Fortunately, cell tower REITs offer a smart, sustainable way to get some of that money back.
You see, cell towers are in intense demand these days. And they’re becoming more and more desirable with every technological advancement we make.
Since we seem to be making those new moves every other day, that’s a lot of desirability we’re talking about.
There are so many purposes that cell towers are being used for in 2019. So many gadgets joining in on the internet of things, from washing machines to garage doors to security systems.
But we don’t have to be talking about any of those contraptions that are only starting to hit the markets. All we have to do is look down at our smartphones, which so many of us use to buy what we need.
The Capitalistic REIT Circle of Retail
Here’s how it works. You swipe your phone out of its sleep mode and into a wide, wide world of e-commerce possibilities.
Do you want to order a pizza? That can be done easily enough.
How about a Chick-fil-A sandwich? There’s an ap for that to help you skip the wait.
Or maybe you’re on that retail apocalypse-inducing Amazon.com to order a book – perhaps The Intelligent REIT Investor, since you heard it was so informative – a new six-pack of socks, and a special air mattress.
(Your in-laws are coming in next week, and they refuse to get a hotel room.)
You press the order button, and voila! You’re done and ready to go back to your business.
But while you do, a whole lot of other business is being made. And it doesn’t automatically start with Amazon itself.
First, that signal has to reach the big kahuna via the nearest cell tower’s connective abilities.
Once it does reach the e-commerce giant, it doesn’t just disappear though. There are records that need to be kept, after all, to run a tidy business. And that all gets stored at a data center – quite possibly owned by another REIT, for that matter. I like CyrusOne (CONE) and Digital Realty (DLR).
These data centers are just as ignored as cell towers. We tech users just don’t think that much about where information goes after we’ve stored or submitted it online.
But that’s fine, because data centers don’t need consumer acknowledgment to keep doing what they’re doing. Which is collect, store, process and distribute submitted data.
As NetworkWorld explains, a data center is simply “a physical facility that enterprises use to house their business-critical applications and information.”
As such, it’s integral to the tech trifecta.
The Circle Continues
NetworkWorld goes on to explain that:
Data centers are often referred to as a singular thing. But in actuality, they are composed of a number of technical elements such as routers, switches, security devices, storage systems, servers, application delivery controllers, and more. These are the components that IT needs to store and manage the most critical systems that are vital to the continuous operations of a company.
As it adds further down, any large company – much less a giant one – is going to need multiple data centers, perhaps in multiple locations. So, considering the prevalence of Silicone Valley and similar spots around the world, you’d better believe there are plenty of data centers already existing or destined to be built.
After the transaction is officially made and recorded at one of those facilities, your copy of The Intelligent REIT Investor, six-pack of socks, and special air mattress for your incoming in-laws need to be collected and shipped out from a warehouse… the final part of the trifecta I’m talking about here. I like STAG Industrial (STAG) and Plymouth Realty (PLYM).
These, of course, are the buildings where items are stored before they’re moved to stores or someone’s front porch. We’re talking about those often enormous structures filled with rows upon rows upon rows of shelves stacked with boxes, bags, bins, and almost everything in between.
If you do a search specifically for “Amazon warehouse,” you might be overwhelmed at how much they can hold. Though it’s hardly just that e-commerce entity that operates out of warehouses. Regular retailers use them too, as do enough other businesses that there are entire classifications to consider.
Some of them are private. Some of them are climate-controlled. And some of them are the kind of distribution centers we’ve been referencing: the critical third part of our trifecta.
The Trifecta in Action
Once the distribution center gets the message and the time to act on it… your purchases are on their way right where they belong.
With you. After all, you did spend the money to acquire them, just as you will for countless purchases going forward. So why not make some of that money back on the billions of likeminded transactions made every year?
I own shares in CCI, CONE, DLR, STAG, and PLYM.
