Some Big-Box Retailers Expanding Despite Closure News
Despite recent headlines about Sears, Macy’s and other big-box retailers closing stores, some retailers pan to open hundreds of stores this year with less fanfare, reported CBRE Group, Los Angeles.
CBRE said 13 retailers have announced plans to open nearly 1,700 stores in the U.S. this year–amounting to more than 40 million square feet of space. Its The Big Box is Dead? report noted that many of the stores that will open are off-price retailers that shoppers increasingly favor for low prices, occasional surprise discounts and limited-time merchandise that encourages return visits.
Melina Cordero, CBRE Head of Retail Research in the Americas, granted that the big-box sector will see a bottom-line vacancy increase due to recent high-profile bankruptcies and closures. In addition to Sears and Macy’s, J.C. Penney and Kmart have announced plans to close hundreds of stores.
“But the hoopla about those collapses nearly ignores that many retailers in the big-box category continue to open additional stores,” Cordero said. “Some–perhaps a lot–of the big-box space now being vacated won’t be empty for long.”
Cordero noted that big-box stores generally occupy 10,000 square feet or more in “power center” malls that typically feature a row of big-box tenants facing a common parking lot. She said CBRE expects the average availability rate for U.S. power centers to register 6.8 percent this year, down more than two percentage points from the sector’s 9 percent 10-year availability peak in 2009.
The report called many big-box stores “category killers,” meaning they specialize in certain merchandise such as Petco for pet care and Dick’s Sporting Goods for sporting goods. It noted that this category does not include department stores, which carry a broad assortment of merchandise and have been hit hard.
Big-box bankruptcies do present a “legitimate” shadow-supply risk, the report said. It noted that Gander Mountain sporting goods and HH Gregg electronics, which occupied more than 12.5 million square feet of big-box space, both declared bankruptcy this year. Together with other major retailers’ announced closures, that figure jumps to more than 95 million square feet of anchor space facing potential vacancy, the report said.
“However, much less attention is paid to the number of big-box retailers that are seeking to occupy vacant space,” the report said. Together, these retailers–including dollar store Dollar General, discount clothing retailer TJ Maxx, warehouse club Costco and grocery store Lidl–represent more than 40 million square feet of potential absorption this year alone.
