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Death of Retail Real Estate Exaggerated: 5 Retailers Opening for Every Closing

August 27, 2019

Death of Retail Real Estate Exaggerated: 5 Retailers Opening for Every Closing - Blog Image

The rumor about the death of retail real estate has been greatly exaggerated.

IHL Group, a global research and advisory firm specializing in technology for the retail and hospitality industry, recently came out with a report detailing the growth of the retail real estate industry. In 2019, more than five retail chains are opening their stores for every retailer seen closing up shop. Overall growth has been reported at 56%, while closings have dropped by 66% in the past year.

In recent years, many closings have been in the apparel and department store chain industries. However, in all other sectors growth has been substantial, specifically food/drug stores and restaurants/fast food. Many characteristics come into play when analyzing the closing of chains across the country, but the major contributor has been rapid overexpansion culminated by historically low interest rates.

According to Retail Renaissance, closing underperforming stores while opening new locations is completely normal and the myth of a retail apocalypse couldn’t be farther from the truth.

Lee Holman, Vice President of Research for IHL Group, reported, “U.S. retail has increased $565 billion in sales since January of 2017, fed not just by online sales growth but net store sales growth…Clearly there is significant pressure in apparel and department stores, however, in every single retail segment there are more chains that are expanding their number of stores than closing stores.”

Since 2017, department and apparel stores were hit the most with 9,651 stores closing, but for the same period, all other segments saw 18,226 new openings.

San Antonio’s retail market is very strong with a high occupancy rate of 94.5%. Currently, it’s not uncommon to see retail centers 100% leased and those under construction already having approximately 60% of their spaces pre-leased. Though competition with big online retailers may be stiff, customers will continue to come back for the unique experience that many San Antonio retail stores provide.

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