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Retail Store Closures Surpass Openings for First Time in Two Years
According to CoStar, more retail stores have closed than opened in 2024—and it’s the first time in several years that’s happened.
Jordan B. & Han-Gwon Lung
August 15, 2024
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Good morning. For the first time in three years, more retail stores across the US have shut down in 2024 than opened. And big-name brands like Target and Big Lots are leading the trend.
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Market Snapshot
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Retailer Bankruptcies
US Retail Store Closures Are Outpacing Openings
According to CoStar, more retail stores have closed than opened in 2024—and it’s the first time in several years that’s happened.
By the numbers: As of August 2024, there have been 4,548 store closures, outpacing the 4,426 openings, leading to a net loss of 122 stores, according to Coresight Research. This contrasts sharply with the previous year, which saw a net gain of 295 stores, and 2022, which had a net gain of 1,575 stores.
Act fast before it’s gone: Retailers in the home goods and improvement sectors are particularly struggling, hit hard by high inflation and interest rates. Big Lots is closing 258 more stores, while Home Depot expects a 3-4% drop in same-store sales for 2024. Conn's HomePlus, LL Flooring, and Buca di Beppo are also shutting locations—LL Flooring alone closed 94 stores this week.
Zoom in: Despite the rise in closures, retail real estate remains tight, with a national vacancy rate of just 4.1%, according to CoStar data. The square footage of new store openings, estimated at 79.5 million square feet, still exceeds the 67 million square feet being vacated.
➥ THE TAKEAWAY
Silver lining: While the rise in store closures signals challenges in specific retail sectors, especially those tied to housing, the broader market remains resilient. Analysts like Brandon Svec of CoStar Group suggest that this isn't a repeat of the "retail apocalypse" seen in previous years. While certain sectors are struggling, others, such as discount and luxury retailers, continue to expand.'
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✍️ Editor’s Picks
Y'all Street: Dallas-Fort Worth has rapidly transformed into the second-largest financial hub in the nation, attracting major firms and talent.
Mixed signals: In 2Q24, the US CRE sector as a whole saw 14% more investments compared to Q1, adding up to $85.7B, with just a 3% YoY drop.
Foreclosure fiasco: Fortress Investment Group is about to hold a massive UCC foreclosure auction for Cohen Brothers Realty assets, worth $534M.
More lab space: San Francisco life science vacancy rates reach 25%, with 42 MSF in inventory, signaling a cooler life sciences market for the foreseeable future.
Sign of the times: Investors can currently buy a share of a rundown Georgia townhouse for just $5.40 through the Landa app, although even at that price it may not be worth it...
🏘️ MULTIFAMILY
Renter’s delight: Rent concessions are going back up across most major US metros due to high apartment supply, with 1 in 3 rentals offering incentives, as typical rents reach $2,070.
San Antonio slowdown: San Antonio's rental market lags behind the rest of Texas, with an 86.2% occupancy rate, lower rents, and minimal construction starts.
Refinancing realities: CBRE's Kamran Paydar discusses ongoing challenges in LA’s multifamily marketing, highlighting loan refinancing issues for a wave of maturing loans.
Where the going’s good: Invesca Development Group just secured $94M in financing for a 330-unit apartment complex in South Florida.
🏭 Industrial
Plant sale success: WestRock Co. successfully sold its former Baltimore plant, with the new owner already securing a tenant, according to Costar.
Emergency supply haven: Dalfen Industrial sold a 423 KSF facility to Florida State for emergency supplies storage as Tampa's industrial market remains steady and strong.
Sporting goods oasis: Hillwood is about to build an 800 KSF DICK's Sporting Goods (DKS) distribution center in Fort Worth, adding 800 temp and 300 full-time jobs.
🏬 RETAIL
Growing lake: Sammy Virani expands his real estate portfolio with a 16-acre shopping center purchase, totaling 50 acres in Houston’s Clear Lake area.
Orlando riches: Dundas Real Estate bought an Orlando shopping center with 4.4M annual visits and a 95.5% occupancy rate for $68.5M, or a staggering $600 PSF.
Reality check: High construction costs, currently averaging $400–$500 PSF, continue to hinder retail development, leading to fewer completions and heavily favoring prime markets.
🏢 OFFICE
Monday madness: Manhattan has seen a boost in office attendance, with Monday leading weekdays at 29.3% more office visits, while overall NYC office attendance is 15% above the national average.
Downsizing delivers: The federal government aims to cut more office space in Washington, DC, reducing the Department of State presence by 771 KSF to save $11M.
UTSA's expansion: UT San Antonio will purchase a downtown office building One Riverwalk Place, with plans to repurpose it for academic use, supporting city growth.
🏨 HOSPITALITY
Oceanfront brilliance: Claridge Homes, led by billionaire Bill Malhotra, is planning a 15-story, 220-room Courtyard by Marriott (MAR) hotel in Pompano Beach.
A MESSAGE FROM REAP CAPITAL
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📈 CHART OF THE DAY
In-migration continues to boost Orlando's multifamily market, but new quarterly construction is starting to slump, according to CoStar data. After the 5-year peak in 1Q23, construction rates have steadily fallen. 3Q24 (QTD) marks the sixth consecutive quarter of declines.
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