It’s difficult to understand the retail real estate climate right now.
There is a lot of news about store closings right now. But at the same time, there are several chains opening locations, too.
Fung Global Retail & Technology releases a regular retail report that gives a good picture of what is taking place in this sector of commercial real estate. The study has both bad and good news for retail landlords, and also gives insight into what types of concepts are both growing and contracting.
First, the bad news. Hhgregg, a relatively large electronics retailer, is liquidating and closing all of its 220 stores, a majority of which are big-box locations. On the apparel end of the spectrum, former mall stalwart The Limited is closing all of its stores, of which there were 250. Additionally, GameStop is shutting 190 units, and RadioShack will close 187 stores. And all of this is on top of the highly publicized major Macy’s, Sears, and JCPenney shrinkage.
That doesn’t mean it is all gloom and doom for the retail real estate industry, though, because plenty of stores are opening as well. Fung Global points toward many chains with expansion plans, but most of them are more on the discount end.
As has been the trend for several years now, dollar stores are growing in a big way. Between the two major chains, Dollar General and Dollar Tree, about 1,650 new stores are planned. We are also seeing fast fashion and discounted-clothing chains such as the stores owned by TJX Cos., like T.J. Maxx and Marshalls, as well as Sweden-based chain H&M. Between the those, close to 200 new units are planned.
And speaking of Europe-based retailers, two discount grocers, Aldi and Lidl, are making major head roads into the United States, and plans released as of this year call for about 230 openings over the next 12 months.
Now, the square footage of what is closing, compared to what is opening, might not equalize. The good news is that some of the stores that are opening could potentially fill up the individual spaces being vacated. There are plenty of uses for the spaces being left behind, and there is a very good chance that that the commercial real estate sector of retail can adapt.