Store closures don't mean retail is dead
U.S. store closures are on pace for a record level in 2019 with more than 7,400 already announced this year, and household names like Sears and Victoria’s Secret shutting their doors at malls across the country.
Yes, but: Property broker CBRE says the fire-and-brimstone, death-of-the-mall narratives are exaggerating what's actually happening in the retail and real estate spaces. Certainly, the mall sector is having some problems, but the full picture also includes an overall Q2 gain in demand across all retail formats, and a gradual repositioning of malls as mixed-use projects.
The big picture: CBRE's latest data shows net absorption — a measure of the amount of new space leased to retailers in a quarter versus what was vacated — has been on a clear downturn over the past few years.
- While net absorption has been falling, the price of rent has been rising. Overall net asking rent increased by 5% year-over-year to $18.01 per square foot, the highest level since Q1 2005 when CBRE began tracking this metric.
What they're saying: "U.S. retail real estate as a whole is healthy, especially grocery anchored centers," CBRE Global President of Retail Anthony Buono tells Axios in an email.
- "Many established retailers are effectively harnessing online sales to combine with their in-store sales, and many online-only brands now are opening physical stores. Average rent across the whole of U.S. retail real estate has risen for 22 consecutive quarters."