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How’s Massive Store Closings Impacting Rents?
A new report by researchers at Reis spells out the retail rent situation facing mall owners and retail developers, resulting from more than 470 store closings in U.S. markets. Reis examined the impact of closures in 77 of 80 primary retail markets, as well as 36 tertiary markets, totaling 28.9 million square feet, to determine the affect on retail rents.
The report looked at how ecommerce, shifting consumer spending habits and poor planning by businesses are playing out.
Key findings include:
- Sports Authority had most closures with 8 million square feet, or 28% of total
- Macy’s is second, with 6.7 million square feet
- Closures have impact, but no compelling conclusion reached
- Markets with more store closures in general saw sharper deceleration in rent growth, but only a few experienced rent declines
- Correlation is not as high as expected; some metros with significant store closures have seen no impact on rents, while others with low store closings saw significant declines in rents
- Stronger impact on rent growth may occur when market is relatively small
- Factors that led to store closures, such as oversupply and sluggish economic growth, impacted rent growth more than the actual closures themselves
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