The number of store closings and retail bankruptcy filings have to slow in the coming years, right? There have been so many of both, it only makes sense that in 2020 and beyond, we’ll see fewer retailers shuttering locations and even fewer declaring bankruptcy, right?
Not necessarily, according to the latest research from the CCIM Institute.
According to a report from K.C. Conway, the institute’s chief economist, in partnership with the Alabama Center for Real Estate at the University of Alabama, the number of store closings and retail bankruptcies isn’t about to slow anytime soon.
That’s because, as the institute says, the United States is “over-retailed.” The country simply has too many stores.
Citing numbers from the International Council of Shopping Centers and CoStar, the CCIM Institute says that the United States has more than 115,000 shopping centers totaling more than 7.5 billion square feet. Citing information from PwC, there is now about 24 square feet of retail space for every person in the United States.
The Institute says that this is 50 percent more retail space per person than in Canada, which has the second-highest amount. It’s also nearly six times the amount of retail space per person in the United Kingdom. PwC predicts that U.S. retail space will need to shrink by more than 50 percent to slow the pace of store closings and bankruptcy filinggs.
Expect plenty of store closings, then, in the next several years. The Institute points to Credit Suisse, which predicts that one in four U.S. malls will close by 2022. Malls now are closing at an annualized rate of 75 per year.
The CCIM Institute report says that the Midwest will see plenty of store closings. According to the report, Illinois, Ohio, and Michigan are among the states that will see the greatest number of mall closings and retail contractions.
The CCIM report also predicts that online retail sales will double by 2025, thanks in large part to booming online grocery sales. U.S. online grocery sales will make up 20 percent of total grocery retail sales – about $100 billion – by 2025, according to the Institute. Physical grocery stores during this same time will shrink to a third or half of their current size, offering a more limited, local inventory, the Institute said.