A new research report from Fung Global Retail & Technology, an international think tank that follows retail and technology trends, uses hard data to outline what retail property owners and managers already know—store closing announcements this year have been off the charts.
Fung Global researchers found that year-to-date in 2017, store closing announcements in the U.S. increased by 97 percent year-over-year, to 3,296 locations. The majority of retailers closing stores are typical mall tenants—department store operators and apparel and electronics sellers. The chains with the highest number of announced store closings, for example, include apparel retailer Rue 21 and shoe seller Payless Inc., each with 400 closings apiece. Apparel chain The Limited comes in third, with 250 announced store closings.
While there has also been a 20 percent year-over-year increase in store opening announcements, to 2,573 locations, that’s not going to create anywhere near enough demand to fill all the newly empty spaces coming on the market. According to a recent report from real estate services firm JLL, department store closures alone will result up to 37 million sq. ft. of newly vacant mall space this year.
Compounding the problem is that many of the expanding retailers fall into the grocery and convenience categories and are likely to look for new locations at grocery-anchored shopping centers and power centers rather than at malls. The chain with the highest number of announced store openings so far in 2017 is Dollar Tree, with plans for 650 new locations. Next on the list is supermarket operator Aldi, with 130 new stores. TJX Cos., which operates TJ Maxx and Marshalls, is third with 111 stores.
Upscale supermarket chains, including Whole Foods and Wegmans, have been signing leases at malls in recent years, as the JLL report points out, replacing department stores as traffic drivers. Whole Foods, however, is now struggling and closing locations itself, making it an unlikely candidate to lease vast amounts of mall space any time soon.