Economy Watch: Contrary to Expectations, Some Retailers Are Expanding
- Jun 01, 2017
This is a time of retail closings. Just this week, Michael Kors joining the contractions—the latest in a long string this year. Even so, there are big-box retailers opening hundreds of stores covering tens of millions of square feet this year with less fanfare, according to a CBRE Group report released Wednesday.
In the report, the company highlights 13 retailers with plans to open nearly 1,700 stores all together in the U.S. this year, totaling more than 40 million square feet. Many are off-price retailers or discounters, which shoppers are increasingly favoring because they offer low prices, as well as occasional surprise discounts and limited-time merchandise to encourage return visits.
Typically, big-box stores occupy 10,000 square feet or more each in power centers, and many are category killers. Department stores—a retail subsector seeing a whole other kind of woe—aren’t covered by the report.
CBRE expects the average availability rate for U.S. power centers to come in at 6.8 percent this year. That’s more than two percentage points less than the sector’s 10-year high for availability of 9 percent, back during the worst of the recession in 2009.
“We will see an increase in vacancy in the big-box sector due to recent bankruptcies and closures,” said Melina Cordero, CBRE’s head of retail research in the Americas. “But the hoopla about those collapses nearly ignores that many retailers in the big-box category continue to open additional stores. Some—perhaps a lot—of the big-box space now being vacated won’t be empty for long.”