The retail industry is currently experiencing significant changes, with store closures outpacing openings. A recent JLL report highlights the shift to more service-based tenants in the retail space.
• In recent years, more retail stores are closing than opening. From 2024 to mid-February 2025, there were over 9,900 closures and only 7,700 openings.
• The closures are primarily in discount, dollar, drug store, and apparel sectors, largely due to bankruptcies among distressed retailers.
• Mall vacancies have risen to an 8. 7% rate, indicating a decline in demand for mall space.
• JLL forecasts that service-based tenants will increasingly fill retail spaces, marking a significant shift. These include restaurants, fitness clubs, and healthcare services.
• Store closings may reach 15,000 in 2025, with openings remaining steady at around 5,800.
• Big-box stores and junior anchors are seeing the highest closure rates, with examples including Party City and Walgreens.
• There is potential for almost 140 million square feet of retail space to open up, as high-quality storefronts are currently in short supply.
• Retail construction remains low, with annual starts at the lowest level in 15 years.
• Macy's plans to close 66 stores, which will significantly impact mall spaces, leading owners to rethink how to utilize the vacant areas.
The retail landscape is changing drastically, with more store closures than openings, particularly among goods-based retailers. However, this may also create opportunities for service-based businesses to expand into the freed-up retail space.
https://www.retaildive.com/news/retail-store-closures-openings-shift-service-tenants/740615/
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