Retail loss, also known as shoplifting or theft, has continued to make headlines month after month since mid-2020. Recently, Target announced that retail loss is forcing them to close 9 stores in Northern California, Portland, New York, Seattle and Pittsburgh. This happened after multiple attempts by the retail giant to curb crime by adding security at stores in the form of guards and theft deterrent tools. According to the National Retail Federation’s 2022 Retail Security Survey, 8 out of 10 retailers reported increased incidents of violence and aggression this past year. Even if these crimes aren’t violent, they certainly aren’t victimless. Retail loss is forcing stores to close, businesses to end, and is possibly the largest issue facing commercial real estate today.
According to a study done by New York Life in 2020, increased crime rates have a direct correlation to lower commercial real estate property values. Of course, crime makes shoppers feel uncomfortable, and as stores close, centers lose value. This is bad for the owner, broker, and the community at large. Even though this study is now a few years old, its findings are still applicable.
Outside of simply closing stores, many retailers are working hard to change the laws so that shoplifters are prosecuted. Since 2022, nine states have passed laws that impose harsher penalties for those involved in organized retail crime. Similar bills are popping up in many other states and in the U.S. Senate.
Understanding crime around your store, or potential retail site, is now a critical component of a retail business plan. One of the first AGS products to step outside the realm of demographics was our CrimeRisk database, which over two decades has evolved to become one of the key components of our overall strategy to become the premier provider of mission critical attribute data to the geospatial community.
The earliest adopters were not our usual retail real estate clients, but rather the commercial insurance underwriters who found an immediate and obvious use for the data. Retailers and shopping centers have more recently discovered the importance of understanding crime risk, especially in regard to providing adequate security for both customers and employees in high-risk areas.
Resources:
Crime Doesn’t Appreciate Commercial Real Estate (newyorklifeinvestments.com)
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