Despite breathless headlines about various big-box retailers closing stores, others in that category are opening hundreds of stores spanning tens of millions of square feet this year with less fanfare, according to a CBRE Group, Inc., report released today as the first in a series of “Beyond the Headlines” reports about the retail real estate market.
In the report, CBRE highlights 13 retailers with plans to open nearly 1,700 stores cumulatively in the U.S. this year amounting to more than 40 million square feet. Many are off-price retailers, or discounters, that shoppers increasingly favor for offering low prices as well as occasional surprise discounts and limited-time merchandise to encourage return visits.
“Granted, we will see an increase in vacancy in the big-box sector due to recent bankruptcies and closures,” said Melina Cordero, CBRE 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.”
Traditionally, big-box stores occupy 10,000 square feet or more each in power centers, which are shopping centers typically featuring a row of big-box tenants facing a common parking lot. Many big-box stores are so-called category killers, meaning they specialize in a certain category of merchandise, such as pet care or sporting goods. The category doesn’t include department stores, which are larger and carry a broader assortment of merchandise.
“Arizona, and the Phoenix market in general, has become synonymous with the power center format but with recent changes in the retail landscape this has been changing,” said Jami Savage-Gray, a retail specialist with CBRE’s Phoenix office. “What we’re seeing now, though, is more room for creativity among power center owners to chop up the vacant big-boxes and put in two 20,000-square-foot anchors or develop empty parking lots into space for fast-casual restaurants.”
CBRE expects the average availability rate for U.S. power centers to register 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 in 2009.
To download the report, click here.