Graduation Year

2019

Date of Submission

4-2019

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Heather Antecol

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Terms of Use for work posted in Scholarship@Claremont.

Abstract

Abstract

This research paper tracks the growth of e-commerce retail sales from 2000 through 2018 to see if the emergence of e-commerce has affected the retail real estate market in any way. With many stores now offering online shopping and many large retailers contemplating lowering their presence in brick and mortar stores, this question is relevant now more than ever. In order to test for the correlation between e-commerce retail sales growth and the retail real estate market, a collection of retail real estate factors are investigated. This paper tests retail real estate factors at the United States country level and a more in-depth city level that investigates 66 individual cities nationwide.

In the OLS modeling, these retail variables represent my dependent variables. These dependent variables were then regressed on a yearly basis against total e-commerce retail sales and a vector of control variables. The results show that returns of the NCREIF property index, asking rent, and percent change in commercial real estate prices for the U.S. are negatively impacted by total e-commerce retail sales. These results indicate that the growth of e-commerce retail sales has negatively impacted the retail real estate market to some degree. This correlation can have long term impacts on the survival of many retail businesses and can eventually affect the economies of small towns and cities across the country. If physical retail locations begin to suffer, other local stores and restaurants will likely suffer as well, eventually impacting the economy on a larger scale.

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