Despite rising cases of breakthrough coronavirus infections and the resulting uncertainty over the efficacy of current vaccines against variants, the retail property market shows impressive signs of recovery at year-end.
Retail sales have moved well above pre-pandemic levels for months, retailer profitability has been improving and consumption is setting all-time highs even as foot traffic at stores has improved significantly from last year’s levels. However, perhaps the most compelling sign of recovery in 2021 is the sharp drop observed in announced store closings.
Following 2020, a year that retailers set the all-time high for the amount of square feet announced for closing, 2021 is on track to set a new low, marking an encouraging reversal for this leading indicator of the health of the retail sector.
Also, perhaps even more encouraging, the amount of space and number of stores retailers said they plan to open during 2021 is well above announced store closings, the first time that has happened since 2014. As of mid-December, just over 3,300 stores have been announced for closing, accounting for 37 million square feet of retail space. At the same time, retailers have announced more than 5,800 store openings, accounting for 53 million square feet.
The most significant store closure news this year came from CVS in November when the company announced it would be closing 900 stores over the next three years, totaling nearly 10 million square feet. Meanwhile, announced store openings were led by discount stores, which continue to expand. Dollar General said it plans to open 1,000 stores in the coming years, and Dollar Tree is expecting to add 600 stores, including 200 Family Dollar locations.
As expected, this has translated to much-improved leasing, including both new leases and renewals. In fact, November marks the ninth consecutive month where the amount of retail space leased outpaced the average from 2017 to 2019. And, while leasing in 2020 was 21% below the historic national average, the recovery in 2021 has pushed it 11% above the historic average.
Although shortages in both labor and inventories will be a drag on sales for many retailers and may slow expansion plans for some, the positive signs in the retail market suggest a relatively positive outlook. In addition to the expansion plans announced by Dollar General and Dollar Tree, some of the largest leasers of new retail space in 2021 also include Planet Fitness, Burlington, At Home, Floor & Decor and Target.
Retail trends, such as announced store closings, will be important for retail owners and investors to track as obstacles and uncertainty are still present in the market. While metrics such as foot traffic and retail sales are useful, they are backward-looking. Tracking announced store closings and openings can shed light on future retail demand, which can be valuable in predicting the future health of the market.
For more information about New Jersey or Philadelphia health care space, industrial space, retail space, office space, land or other New Jersey and Philadelphia commercial properties, please call 856-857-6300 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading New Jersey and Philadelphia commercial real estate broker that specializes in both New Jersey and Philadelphia cannabis, healthcare space, office space, retail space, land and New Jersey and Philadelphia industrial space.
Wolf Commercial Real Estate, a full-service CORFAC International brokerage, and advisory firm, is a premier New Jersey and Philadelphia commercial real estate brokerage firm that provides a full range of New Jersey and Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other New Jersey and Philadelphia commercial properties for buyers, tenants, investors, and sellers.
A New Jersey and Philadelphia commercial real estate broker with expertise in New Jersey and Philadelphia commercial real estate listings, Wolf Commercial Real Estate provides unparalleled expertise in matching companies and individuals seeking new New Jersey and Philadelphia office space, New Jersey and Philadelphia retail space, or New Jersey and Philadelphia industrial space with the New Jersey and Philadelphia commercial properties that best meets their needs.
As experts in both Philadelphia and New Jersey commercial real estate listings and services, the team at our commercial real estate brokerage firm provides ongoing detailed information about Philadelphia and New Jersey commercial properties to our clients and prospects to help them achieve their real estate goals.
Please visit our websites for a full listing of South Jersey, Philadelphia, and New Jersey commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.
