Wednesday, April 18, 2018

Retail apocalypse continues as 2018 has seen almost more store closures in the first quarter than in all of last year

2017 was a horrific year for retailers as an estimated 105 million sq ft. of shopping space went vacant, and thousands of stores shuttered their doors.  But this may have been just the beginning as in just the first four months of 2018, another 77 million sq ft. of space has gone empty and the prospect of a retail apocalypse has been confirmed.

Retail real estate carnage is going to continue this year with no signs of slowing up, as Bloomberg reported this morning that over 77 million square feet of retail real estate has closed this year and that 2018 will easily pass 2017's record of 105 million square feet closed. The latest example was the fall of the once massive Toys 'R' Us name: 
The fall of the Toys “R” Us chain, with more than 700 U.S. stores, shows how much retail real estate has changed in just the last decade. When KKR & Co.Bain Capital, and Vornado Realty Trust took over the company in 2005, the buyers justified the $7.5 billion price, in part, because of the supposedly valuable properties that came with the deal. 
This pace of closings puts 2018 on pace to pass 2017's record of 105 million square feet of retail space closed: 
At last count, U.S. store closures announced this year reached a staggering 77 million square feet, according to data on national and regional chains compiled by CoStar Group Inc. That means retailers are well on their way to surpassing the record 105 million square feet announced for closure in all of 2017. - Zerohedge
It was perhaps inevitable that U.S. retail would eventually feel the consequences of the overproduction it engineered during the first decade of this century when the housing bubble was fueling growth at any cost.  And now that consumers are once again tapped out, and with historically high debt accumulation, the end for store closures appears nowhere in sight, and it will take many more years before the dust settles in the retail sector.


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