“Despite this trend, KBRA continues to view anchored neighborhood shopping centers that provide needs-based goods and services favorably relative to other retail sector formats. However, centers that are in trade areas which have experienced in-migration from millennials may be adversely impacted by that group's greater tendency to shop online. Neighborhood centers with grocery anchors could also be negatively impacted in such markets, particularly if Amazon expands its grocery business,” Larry Kay, senior director of KBRA tells GlobeSt.com. “We believe that brick-and- mortar retail stores are here to stay, but will have to transform themselves with a digital age makeover.”

Another e-commerce turning storefront trend is the Amazon Bookstore. Of the 10 that have opened or are scheduled to open, half are on the West Coast. This updated total comes this week after a bookstore in Bellevue, WA was also confirmed to be in the works, along with Broadway Plaza in Walnut Creek, CA, Seattle, Portland and San Diego stores. The Broadway Plaza store at 1259 Broadway Plaza is rumored to have a fall 2017 open date.

The secular shift to e-commerce sales has contributed to recurring announcements of store closures and retailer bankruptcies, including those of JCPenney, Macy's and Sears, and the liquidation of Sports Authority, among others. Regional mall operators have struggled from reduced foot traffic due to the loss of anchors, as well as increased vacancies from in-line tenants. As this has occurred, bricks-and-mortar retail has been searching for a way to provide shoppers with an experience that cannot be replicated online.

Based on KBRA's review of CMBS collateral and the effects of e-commerce, it is most concerned with the less productive B/C shopping malls that cannot easily re-lease space from tenants that have shuttered stores. These malls will also remain under pressure as stronger in-line tenants seek to maximize sales and desire more productive locations. Defying the e-commerce effect, off-price outlet centers have been able to flourish as e-commerce has expanded. Outlet centers may be less sensitive to online competition than full price stores, because most retailers are not selling the made-for-outlet goods on the Internet. As a result, outlets are still a favored investment type, although there are rumblings of oversupply in the sector. Outside of the off-price segment, e-commerce is expected to continue testing the business models of many traditional retailers, says KBRA.