All Those Empty Stores Set Up Retail’s Comeback
Once again, we’re hearing the familiar predictions of the demise of retail as the pandemic brings on a deluge of store closings, especially for those businesses with too much debt and goods that have fallen out of fashion. As long as the U.S. is running at less than full speed because of the coronavirus — and perhaps for some time after — it may be difficult for landlords to fill newly vacant spaces. But long-term trends in retail, hospitality and commercial real estate suggest that in economically stable communities, those spaces should eventually be occupied. It’s even possible that the 2020s will accelerate the trend of successful e-tailers expanding into physical locations. The rise in store closures — one analysis said as many as 100,000 brick-and-mortar locations could shut by 2025 — are the easy part to think about. Apparel company Brooks Brothers is the latest, filing for bankruptcy yesterday, while Lucky Brand Jeans filed last week. Both have closed stores and struggled with falling sales. Changes in buying patterns brought about by e-commerce along with heavy debt loads have led to the demise of countless retailers during the past decade. Clusters of bankruptcies then bring about concerned articles about the state of the retail industry — here’s one from 2009 after the bankruptcies of Circuit City, Linens ‘n Things and Sharper Image. It’s natural that this crisis would be seen as another moment of reckoning for retail and the commercial real estate that relies so much on it. But it’s important to note that coming into this crisis there’s no evidence that physical retail is an industry on death’s door or even in secular decline. Read more at Bloomberg.
