Mixed Messages in the Retail Market?

There continue to be many store closures and bankruptcies in the retail market, but the overall vacancy rate of these spaces hasn’t yet spiked.  Reis, a real estate research firm has optimistically reported that even though there have been more stores closings, the retail vacancy rate has not and is not expected to rise.

There are various reasons why more stores are closing but the retail vacancy rates remain basically unchanged.  One reason is that there has been a regular demolition of shopping centers, with that space being put to work for different reasons. Another reason for the lack of change is that some of the space is taken up by businesses such as fitness centers which require a lot of space.

In evaluating the near future of retail, it is understandable if people find it difficult to be overly optimistic.  Toys R Us is closing and it seems to be the bell-cow for retail in the near future.  The company alone has 740 locations all around the United States—all closing.  Other companies with problems include the shoe seller Nine West, which has filed for bankruptcy, and Claire’s, the teen accessories retailer.

However, many of the same reports that underline the troubles of Toys R Us and Nine West like to point out that in a country of more than 300 million people, retail is not dead or dying.  The retail sales figures for February 2018 is 4% higher compared to one year ago.  The E-Commerce rates were up 16.9 percent from the fourth quarter of 2017 when compared to the same time in 2016.

As in any market, some items are robust in their sales, and others are struggling.  When comparing December of 2017 to the previous year, women’s apparel saw a decline in sales of 9.4%.  During the same period, electronics retailers saw an increase in sales of 25.6%.

Many experts in retail real estate commented that it is up to retailers to stay ahead of the curve by anticipating what consumers want.  More consumers are looking to make purchases online, and if retailers don’t have a plan to help those consumers, a competitor will.

So far in 2018, there have been more than 3200 announced store closings, and there have been just short of 1700 store openings.

The National Retail Federation believes that retail sales will grow up to 4.4% in 2018.  The group cites strong consumer confidence, low unemployment, and a strong stock market.  The NRF states that it is unlikely that their part of the economy will struggle when it plays such an integral part of the fabric of a market that continues to be strong.

If you would like more information regarding buildings available in the greater Boston office market, contact Jeremy Cyrier at [email protected] or by phone at 617-340-8520.

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