Retail Vacancies on Track to Reach Record High
April 20, 2018
The amount of retail space turning vacant in 2018 is on pace to break a record, reports the CoStar Group, a commercial real estate services firm that has been tracking the amount of retail square footage slated to close nationwide since 2008. Factoring up to April so far of this year, more than 90 million square feet of retail space is expected to go empty. That’s on track to surpass a record of 105 million square feet that closed last year, Suzanne Mulvee, a senior real estate strategist at CoStar, told CNBC.
Several giants have been closing their big-box stores—Toys “R” Us, Sam’s Club, Sears, and Bon-Ton—which has only been adding to the retail sector’s carnage.
“I think there’s probably a couple more announcements coming [in 2018],” Mulvee told CNBC. “It wouldn’t surprise me to see a few more significant announcements from department stores, and more chains that continue to struggle that are unprofitable.”
A report by Cowen & Co. puts Gap, Macy’s, J.C. Penney, and Signet Jewelers on its list of retailers that may be in danger.
“We believe stores are not going away but without a doubt, stores and malls will be redefined as customer acquisition points and off-mall locations will continue to be a platform for off-price and value retailers to expand their footprint,” says Oliver Chen, a Cowen analyst.
Not all property owners are viewing the closures as doom and gloom for the retail sector. Some are viewing it as an opportunity to fill their spaces with new tenants and more profitable businesses too, CNBC reports. As more big-box retailers move out, the retail sector may reshape itself to provide more mixed-use components, such as residential spaces, offices, entertainment venues, or medical centers, housing analysts note.
Source: “The Amount of Retail Space Closing in 2018 Is on Pace to Break a Record,” CNBC (April 18, 2018)
Updated: August 17, 2018