The National Retail Federation said this month it’s expecting a lift in holiday retail sales—November and December—of 3.8% to 4.2% over last year to between $727.9 billion and $730.7 billion.
The organization’s President and CEO Matthew Shay cited in a statement continued growth in the U.S. economy and consumer spending as drivers of the estimate.
“Nonetheless, there has clearly been a slowdown brought on by considerable uncertainty around issues including trade, interest rates, global risk factors, and political rhetoric,” Shay went on to say. “Consumers are in good financial shape and retailers expect a strong holiday season. However, confidence could be eroded by continued deterioration of these and other variables.”
There’s also the question of how much vacant space will be unloaded onto the market from retailers such as Los Angeles fast-fashion chain Forever 21 Inc., whose request to close as many as 178 stores goes before a bankruptcy judge later this month; and Bed Bath & Beyond’s recent announcement to close an additional 20 doors on top of the 40 revealed earlier this year.
Forever 21 in Orange County cited the stores at Fashion Island and Anaheim Plaza, a Forever 21 Red at The Market Place and a not yet opened Brea Mall store for its beauty concept Riley Rose in its list of potential closures.
Vacancy Rates Under 4%
Those closures, while generating headlines, won’t have too much effect on retail occupancy rates in OC.
As of midyear, the area’s base of about 85 million square feet of retail space counted a vacancy rate of 3.4%, according to the latest data from CBRE Group Inc.
The average rental rate for retail space in the county jumped from $2.42 per square foot a year ago to $2.58 per square foot, a 6.6% increase, due to lower rent space leasing out, pushing up the average, the brokerage’s latest data shows.
Time will tell how quickly newly vacant spaces will be absorbed, but the International Council of Shopping Centers—the organization representing center owners—maintains a glass half full outlook.
A spokesperson for ICSC pointed to the continued trend of coworking, grocers, fitness, education, and other nontraditional retail tenants helping to absorb the space, in addition to the girth of digital brands now exploring their options at brick-and-mortar.
“Owners typically know far in advance of a retailer’s departure and have already made arrangements for the space,” the spokesperson said.
