{"id":937,"date":"2018-01-02T07:20:25","date_gmt":"2018-01-02T14:20:25","guid":{"rendered":"https:\/\/tradersnation.com\/?p=937"},"modified":"2018-01-17T16:29:34","modified_gmt":"2018-01-17T23:29:34","slug":"a-tsunami-of-store-closings-is-about-to-hit-the-us-and-its-expected-to-eclipse-the-retail-carnage-of-2017","status":"publish","type":"post","link":"https:\/\/tradersnation.com\/index.php\/2018\/01\/02\/a-tsunami-of-store-closings-is-about-to-hit-the-us-and-its-expected-to-eclipse-the-retail-carnage-of-2017\/","title":{"rendered":"A tsunami of store closings is about to hit the US \u2014 and it&#8217;s expected to eclipse the retail carnage of 2017"},"content":{"rendered":"<div>\n<div>\n<p><a href=\"http:\/\/www.businessinsider.com\/author\/hayley-peterson\"><img decoding=\"async\" src=\"http:\/\/static1.businessinsider.com\/image\/5373d5626bb3f7e85f85bba0-100-100\/hayley-peterson.jpg\" \/><\/a>by Hayley Peterson<a href=\"http:\/\/www.businessinsider.com\/\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/upload.wikimedia.org\/wikipedia\/commons\/a\/af\/Businessinsider-color.png\" alt=\"Related image\" width=\"111\" height=\"61\" \/><\/a><\/p>\n<\/div>\n<ul>\n<li>More than 12,000 stores are expected to close in 2018 \u2014 up from roughly 9,000 in 2017, according to Cushman &amp; Wakefield.<\/li>\n<li>A rash of bankruptcy filings and announcements to close stores are expected at the start of the year, when retailers are flush with cash from the holiday season.<\/li>\n<li>Among the companies <a href=\"http:\/\/www.businessinsider.com\/retail-bankruptcies-expected-in-2018-2017-12\"> most likely to file for bankruptcy within the next year<\/a> are Sears, Bon-Ton Stores, Bebe Stores, Destination Maternity Corp., and Stein Mart.<\/li>\n<li>The closings would push hundreds of shopping malls to the brink of death.<\/li>\n<\/ul>\n<hr \/>\n<p>Retailers are bracing for a fresh wave of store closings in 2018 that is expected to eclipse the rash of closings that rocked the industry last year.<\/p>\n<p>&#8220;Landlords are panicking,&#8221; said Larry Perkins, the CEO and founder of the advisory firm SierraConstellation Partners. &#8220;The last year was pretty apocalyptic from a retail standpoint, and the macro issues haven&#8217;t changed. There will continue to be a high degree of bankruptcies and store closures.&#8221;<\/p>\n<p>2017 was a record year for both store closings and retail bankruptcies. Dozens of retailers including Macy&#8217;s, Sears, and J.C. Penney shuttered an estimated 9,000 stores \u2014 far exceeding recessionary levels \u2014 and 50 chains filed for bankruptcy.<\/p>\n<p>But there&#8217;s still a glut of retail space in the US, and the fallout is far from over.<\/p>\n<p>The number of store closings in the US is expected to jump at least 33% to more than 12,000 in 2018, and another 25 major retailers could file for bankruptcy, according to estimates by the commercial real estate firm Cushman &amp; Wakefield.<\/p>\n<figure style=\"width: 1023px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/static4.businessinsider.com\/image\/5a464ac9b0bcd5ab188b740a-1023\/screen%20shot%202017-12-29%20at%2090005%20am.png\" alt=\"Store closures\" width=\"1023\" height=\"504\" data-mce-source=\"Cushman &amp; Wakefield\" \/><figcaption class=\"wp-caption-text\">Cushman &amp; Wakefield<\/figcaption><\/figure>\n<p>Nearly two dozen major chains including Walgreens, Gap, and Gymboree have already announced plans to close more than 3,600 stores this year.<\/p>\n<p>Many more announcements on closures and bankruptcies are expected in the coming months.<\/p>\n<p>The start of the year is a popular time to announce store closings and bankruptcies because retailers are typically flush with cash after the busy holiday season \u2014 and closing stores and filing for bankruptcy are costly.<\/p>\n<p>Among the companies <a href=\"http:\/\/www.businessinsider.com\/retail-bankruptcies-expected-in-2018-2017-12\"> most likely to file for bankruptcy within the next year<\/a> are Sears, Bon-Ton Stores, Bebe Stores, Destination Maternity Corp., and Stein Mart, according to S&amp;P Global Market Intelligence.<\/p>\n<h2>Mass store closings will force shopping malls out of business<\/h2>\n<p>When combined with last year&#8217;s record-high store closings, an even higher rate of closings in 2018 would push hundreds of low-performing shopping malls to the brink of death.<\/p>\n<p>The commercial real estate firm CoStar has estimated that nearly a quarter of malls in the US, or roughly 310 of the nation&#8217;s 1,300 shopping malls, are at high risk of losing an anchor tenant.<\/p>\n<p>Anchor tenants are retailers like Macy&#8217;s and J.C. Penney that occupy the large, multistory buildings at mall entrances.<\/p>\n<figure style=\"width: 1201px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/static3.businessinsider.com\/image\/5a454a07b0bcd5b9008b753d-1201\/bi-graphicsstore%20closing%20in%202018.png\" alt=\"BI Graphics_Store closing in 2018\" width=\"1201\" height=\"1346\" data-mce-source=\"Business Insider\/Samantha Lee\" \/><figcaption class=\"wp-caption-text\">Business Insider\/Samantha Lee<\/figcaption><\/figure>\n<p>The loss of even one anchor tenant can trigger a multidecade downward spiral for mall owners.<\/p>\n<p>That&#8217;s because the malls don&#8217;t only lose the income and shopper traffic from that store&#8217;s business; such closings often trigger clauses that allow the remaining mall tenants to exercise their right to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the vacant anchor space.<\/p>\n<p>That&#8217;s good news for retailers looking to grow their physical assets \u2014 it means they are more likely to score low rent and favorable lease terms.<\/p>\n<p>But it&#8217;s terrible news for retail landlords, some of whom are now trying to stop the bleeding by suing the companies that are closing stores.<\/p>\n<h2>Mall owners are suing retailers to keep stores open<\/h2>\n<p>Simon Property Group, one of the biggest mall operators in the US, sued Starbucks this year after the coffee chain said it planned to <a href=\"http:\/\/www.businessinsider.com\/starbucks-is-shuttering-all-teavana-stores-2017-7\"> close all 379 stores in its Teavana chain, 77 of which are located in Simon Property Group malls<\/a>.<\/p>\n<p>The mall owner demanded that Starbucks keep running the tea shops located in its malls, arguing in part that their closing would reduce traffic to surrounding stores.<\/p>\n<p>A judge ruled in Simon Property Group&#8217;s favor in December and ordered Starbucks to keep operating the Teavana stores in question.<\/p>\n<figure style=\"width: 1024px\" class=\"wp-caption alignnone\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/static1.businessinsider.com\/image\/57b1ce9bce38f234008b6b09-1024\/shopping%20mall.jpg\" alt=\"Shopping Mall\" width=\"1024\" height=\"683\" data-mce-source=\"Oli Scarff\/Getty Images\" \/><figcaption class=\"wp-caption-text\">Oli Scarff\/Getty Images<\/figcaption><\/figure>\n<p>Whole Foods was also <a href=\"http:\/\/www.businessinsider.com\/judge-forces-whole-foods-to-reopen-failed-365-store-2017-12\"> recently sued<\/a> for closing a Seattle-area store, with the owners of the property fighting the company for breaking its long-term lease.<\/p>\n<p>A judge has since ordered Whole Foods to reopen the store, which the grocer had closed in October.<\/p>\n<p>As mall operators become increasingly desperate to keep the lights on, many more retailers could find themselves in court, fighting to shut down struggling stores.<\/p>\n<h2>Not all retailers and shopping malls are doomed<\/h2>\n<p>To be sure, there are still hundreds of high-performing shopping malls in the US that are expected to remain immune from the fallout of shrinking retailers.<\/p>\n<p>Only the lowest-performing malls \u2014 of which there are roughly 300 \u2014 are in danger of going out of business.<\/p>\n<p>There are also plenty of retailers, mostly discounters, that are growing their physical assets while others shrink.<\/p>\n<p>Dollar General, Dollar Tree, Lidl, Aldi, Ross Stores, and TJ Maxx are planning to open hundreds of new stores next year.<\/p>\n<p>&#8220;Retail isn&#8217;t going away by any means,&#8221; Perkins of SierraConstellation said. &#8220;We just got a little bit out of control with the volume of retailers and the number of stores.&#8221;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>by Hayley Peterson More than 12,000 stores are expected to close in 2018 \u2014 up from roughly 9,000 in 2017, according to Cushman &amp; Wakefield. A rash of bankruptcy filings and announcements to close stores are expected at the start of the year, when retailers are flush with cash from the holiday season. Among the [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":939,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[100,99],"tags":[159,160,153,161],"class_list":{"0":"post-937","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-real-estate","8":"category-retail","9":"tag-closing","10":"tag-malls","11":"tag-real-estate","12":"tag-retail"},"aioseo_notices":[],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/posts\/937","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/comments?post=937"}],"version-history":[{"count":0,"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/posts\/937\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/media\/939"}],"wp:attachment":[{"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/media?parent=937"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/categories?post=937"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tradersnation.com\/index.php\/wp-json\/wp\/v2\/tags?post=937"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}