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More Retail Stores To Close?

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Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
U.S. Retail Investment Outlook | Q3 2016
Rise of higher-quality opportunities benefiting patient investors and secondary market volumes

U.S. Retail property market

-50 bps12-month change in total vacancy (bp) 1.1%12-month net absorption (% of inventory)
0.7%12-month completions (% of inventory) 3.2%12-month rent growth (p.s.f.,%

Although their survey only covers the left and right of the country and leaves out the middle.

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Randolph Kinney

Elite Member
Joined
Apr 7, 2005
Professional Status
Retired Appraiser
State
North Carolina
I am seeing vacant spaces in strip malls here. And there are new strip malls being built too.
 

Gobears81

Senior Member
Joined
Nov 7, 2013
Professional Status
Certified General Appraiser
State
Illinois
I have increasingly given thought to the profitability of these types of properties. Large furniture stores, department stores, and movie theaters often sit almost empty throughout the week, only to show some decent traffic on the weekends. Enclosed shopping malls have a ton of common space to heat, clean, and maintain, while the stores also have little activity, but the rents are often quite high. Even the small retail storefront spaces in the Downtown that pay, say, $750 a month seem to operate on razor-thin margins based on what is actually being sold in the stores. Utilities, labor, and taxes are the three expenses that, I believe, will result in a pretty large-scale downsizing in the amount of retail space in the next few years. But, there are admittedly some inefficiencies in business model for many of these properties.

I've seen some interesting re-uses of the big box stores. Outside of another retail user, churches, lumber yards, power sports, self-storage, office, warehouse/ industrial, are some of the re-uses I've seen around here.

There was an article on a very similar topic in the Appraisal Journal this month, though I haven't had a chance to read it yet.
 
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techbiker

Sophomore Member
Joined
Dec 4, 2015
Professional Status
General Public
State
Texas
My city has over 80 sq ft of retail space per person! http://www.dallasnews.com/news/plan...ials-reconsider-citys-overabundance-of-retail

There are no fewer than 20 hamburger restaurants within 10 minutes of my house. It's insane!:

-Whataburger (3x)
-Olive Burger
-Burger Street
-Burger Break
-Five Guys (2x)
-McD's (3x)
-LA Burger
-Burger King
-Village Burger Bar
-Grub Burger
-Dugg Burger
-Kenny's Burger Joint
-Mooyah Burger
-Country Burger
-Twisted Root Burger
-JC's Burger House (3x)
-Gazeebo Burgers
-Jimmy's Burger
-Smashburger
-Braum's Ice Cream and Burgers

Since the recession ended, much of the retail space has been filling up with new tenants. Sure rents are lower and tenants occasionally unconventional (many ethnic stores, etc.) but the space has been filling out. When I return to New England, I'm always surprised by the lack of retail space. There is only 1 home depot in town!? I wonder if this is a regional phenomenon?

Office space is in high demand. I'm speaking from experience after purchasing one of the few existing free-standing offices to come on the market recently.
 
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TRESinc

Elite Member
Joined
Dec 1, 2011
Professional Status
Licensed Appraiser
State
Ohio
I have increasingly given thought to the profitability of these types of properties. Large furniture stores, department stores, and movie theaters often sit almost empty throughout the week, only to show some decent traffic on the weekends. Enclosed shopping malls have a ton of common space to heat, clean, and maintain, while the stores also have little activity, but the rents are often quite high. Even the small retail storefront spaces in the Downtown that pay, say, $750 a month seem to operate on razor-thin margins based on what is actually being sold in the stores. Utilities, labor, and taxes are the three expenses that, I believe, will result in a pretty large-scale downsizing in the amount of retail space in the next few years. But, there are admittedly some inefficiencies in business model for many of these properties.

I've seen some interesting re-uses of the big box stores. Outside of another retail user, churches, lumber yards, power sports, self-storage, office, warehouse/ industrial, are some of the re-uses I've seen around here.

There was an article on a very similar topic in the Appraisal Journal this month, though I haven't had a chance to read it yet.

i've seen mostly the same things here. over the past few years one local mall has completely closed and another is fast approaching extinction. you can drive through any of the cities i cover and find multiple vacant sites in the strip malls/shopping areas in just about every economic level. about the only consistent expansion i have seen over the past year or two are the dollar stores (dollar general being the most prevalent) and the majority of those are in cities that are cash-strapped. newer, younger churches have taken over a lot of the large vacant buildings.
 

Meandering

Elite Member
Joined
Feb 26, 2006
Professional Status
Real Estate Agent or Broker
State
Pennsylvania
Ford canceling plans for $1.6 billion plant in Mexico, investing $700 million in Michigan expansion instead
21 Mins Ago

Ford Motor said on Tuesday it plans to cancel production of a $1.6 billion plant in Mexico, and will instead invest $700 million in Flat Rock, Michigan.

The U.S. auto giant said it will add 700 direct new jobs in Flat Rock to produce high-tech electrified and autonomous vehicles, plus the Ford Mustang and Lincoln Continental.

Ford had originally planned to build its Ford Focus at a plant in San Luis Potosi, Mexico. The company said it will continue to build its Focus at an existing plant in Hermosillo, Mexico, to improve company profitability.

Trump blasts General Motors: Make Chevy Cruze model in US or 'pay big border tax'

President-elect Donald Trump on Tuesday attacked General Motors in a tweet, claiming the auto giant is making a Chevy Cruze model in Mexico and then sending them to U.S. dealers tax free.

"General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!" Trump said on Twitter.

More manufacturing jobs, will be a benefit to malls.

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Michael S

Senior Member
Joined
Mar 18, 2009
Professional Status
Certified General Appraiser
State
New Mexico
Most of the K-Marts that closed here in Albuquerque were pretty quickly re-tenanted and at much higher rates. K-Mart might have been paying $4/SF and some investor bought their empty box, renovated it for two tenants and was able to get $10-15/SF rents for two 30,000 SF tenants instead of one 60,000 SF tenant.

I see some retail stores open in strip malls and I feel bad for the person who signed a lease and started that business because I can tell immediately that they're doomed to fail. For instance on Saturday I noticed there was a small storefront next to a boarded up restaurant (previously appraised) in a not so great part of town. They're trying to sell appliances in a neighborhood with a median household income of maybe $35k. How many appliances will they have to sell just to cover their overhead, let alone make a profit? Can they really offer better price, selection, or service than the local big established appliance store, or Home Depot, Lowes, Sears, etc.? Unless they're a front for laundering money (as was the new car wash across the street) I suspect they'll be closed in 6-12 months.
 

Howard Klahr

Senior Member
Joined
Oct 4, 2004
Professional Status
Certified General Appraiser
State
Florida
QUOTE="techbiker, post: 2735736, member: 148464"]retail space has been filling up ... Office space is in high demand[/QUOTE]
2016 Vacancy Rate Dallas Metro Area
Retail - 5.6%
Office - 19.5%

Yeah, office is in greater demand

I've seen some interesting re-uses of the big box stores. Outside of another retail user, churches, lumber yards, power sports, self-storage, office, warehouse/ industrial, are some of the re-uses I've seen around here.
All at below replacement cost
 
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