Flashy headlines and a wave of store closings have led to panic, causing former naysayers to bid farewell to retail stores and embrace the uncertainty of tomorrow. Nearly every major publication has released an article on the topic, but is retail really on its last legs or just misunderstood?
Diving deeper into retail fundamentals, it’s not hard to see that while retail’s climate has changed rapidly since 2010, for every closing retailer, another is looking to expand in its place. According to Crittenden, numerous major tenants expanded their reach last year, the fastest growing segments of which were discount, auto repair, and pharmacy. Many took previously occupied space, making good use of current market conditions.
Southern California is a prime market for retailer expansions. Big-box vacancy increased in the second half of last year, but the closed stores have presented opportunity instead of Armageddon. Retail vacancy has remained low due to expanding tenants signing major deals in Southern California this year.
Does the continued success of retail in the region amid closing locations mean retail is in peril due to internet competition, or are other retailers just doing it better? Prime tenants taking over underperforming competitors that closed their doors may indicate that retailers’ growing pains are a necessary process and a blueprint of how to do better business. Retail stores will continue to close this year, but other tenants that cater to consumer needs, wants, and experiences will continue to expand in Southern California.
