This Is What Will Happen To All The Empty Stores You’re Seeing
Depending on who you ask, estimates of the number of retail stores that will close in 2017 range from 7,000 to 10,000. Given the retail climate, the number of new store openings is likely to be much lower. If you walk in almost any shopping area now, you see vacancies. They’re an eyesore, they make people less likely to shop, they ruin the adjacencies that spur shoppers to buy and they limit the incomes of store employees, retailers and landlords. Retail real estate doesn’t vanish if you don’t use it, so what will happen to all those empty stores? No one knows for sure but there are some things we’re seeing now that are important indicators of where all that retail space will go. One of the inevitabilities of retail real estate now is that it will be less valuable in the future than it was in the past. You don’t need a crystal ball to see that there’s more supply than demand of retail square feet. Basic economics says when that happens the price goes down. Landlords are not acting quickly to recognize that, they are not acknowledging that their asset is less valuable, they are not lowering the price of their space fast enough to generate new leases and soak up what’s coming on the market. They are letting the space sit on the market while their thinking adjusts. Craig Macnab, the CEO of National Retail Properties, told me that at the present time the market is “underdemolished.” Landlords are going to have to be more flexible, not just about the price, but about how space is used. And they may have to make investments in their real estate to reconfigure it and make it more useful for what consumers want now. Read more at Forbes.
