The amount of retail space slated to close in 2018 is on pace to be an all-time record according to commercial real estate services firm CoStar Group. As of April the number of square feet of that has gone dark is 90 million. That’s on track to shatter the previous record of 105 million square feet set just last year.
CoStar has been tracking the annual number of retail-square-feet closings since 2008.
The latest retailer to announce major store closings is Bon-Ton, the department store chain. Earlier this week the company was forced into liquidation after failing to secure a plan to restructure the business and keep some locations open. The company had dual headquarters in Milwaukee and York, Pennsylvania, and operated 200 stores totaling about 24 million square feet.
Retailers expected to announce further location-closings this year include Sears, Guitar Center, J.Crew and David’s Bridal.
Industry experts don’t believe storefronts are going away but they do believe the retail industry is undergoing a major redefinition. “I think it gets harder and harder the more these big boxes come on the market,” for property owners to find replacements, said Suzanne Mulvee, a senior real estate strategist at CoStar.
It’s believed the future of malls and retail properties will include diverse uses, including residential space, offices, entertainment and medical centers. CoStar believes 2018 will be a “peak year” for retail closings, with firms moving toward leaner store-locations and operations.
Some property owners see the closures as a positive, creating an opportunity to fill vacated space with more profitable businesses. A recent case study found that “Class-A” mall owners were more likely to fill empty space within a year of a major department store moving out than other landlords.
Photo by Random Retail via Flickr