Future of Real Estate affected by MAJOR Store Closures
What will happen with the inventory of real estate due to a high number of big name store closures (ie. Gap, Victoria's Secret, JC Penney, ToysRUs, K-Mart, Sears, etc)?
[{"id": "ei5u1ek", "text": "Probably not much since there are plenty other big name stores to take over. ", "replies": [{"id": "ei5uilz", "text": "Who exactly? Amazon is king. Macys is closing stores, Nordstroms is closing stores, KMart and Sears are closing stores, Target is closing the bigger ones and moving into smaller city center stores. Who is left? Walmart? How many do you think they will land? Not to mention, grocery store closures coming up. Kroger doing horrible.", "replies": [{"id": "ei5vj5o", "text": "Regarding the effects of the online shopping boom, retail itself is changing to meet the demands of the consumers with more ship to store options and other solutions to stay not only afloat, but thrive.\n\nMany internet-based companies have been leasing retail space to do the same as well. \n\nAmazon is closing up its pop-up stores but no one thinks that\u2019s the end of it. They are going to enter so many different markets and will need space to do so.\n\nWith any adoption of a disruptive technology, the market changes and we\u2019ll see the effects all the way down to real estate. As some people have said on here, it just depends. The smarter mall REITs have been getting crafty with outdoor spaces and investing more in complete spaces. Good standalone space is scarce, someone will come in. \n\nThe market changes and we\u2019ll adapt. People will get hurt and others make a couple bundles. Most people will do both lol. ", "replies": [{"id": "ei5vqko", "text": "So you prefer to order online and pick it up in store? I think most people would prefer to just have it delivered to their front door step. I know I would. Now a days it will get here the same day or sometimes within a couple hours.", "replies": [{"id": "ei618oa", "text": "It\u2019s not 100% or 0%. There\u2019s a population that prefers to pick up in store in exchange for shorter delivery times or not paying shipping. With these big box retailers, many of them have those products in the store so it really just ends up being something similar to instacart.\n\nAmazon can\u2019t do everything. I know it\u2019s good for some groceries and household items but their king status is misty derived from their potential imo. ", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "eido607", "text": "There are 100s of new companies that open every day. Clothing stores, cooking stores etc. Tons that start mostly online and eventually realize the need for a partial transition to brick and mortar. What\u2019s amazon been doing lately? Whole Foods, brick n mortar. They\u2019re also going to establish large pick up center and storage center stores. Guess what they need for all that. REAL ESTATE. \n\nThere\u2019s 100s of articles you can find on the return to brick n mortar. ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ei5uns7", "text": "They'll be re purposed into something else that serves the new markets that emerge.  ", "replies": [{"id": "ei5us7o", "text": "So in other words, your answer is that you don't know.", "replies": [{"id": "ei5v3ou", "text": "Uhhh nope?", "replies": [], "depth": 3}, {"id": "ei5v6mv", "text": "He knows that they\u2019ll be repurposed. Likely to multi-family, or more experiential retail from what I\u2019ve seen. ", "replies": [{"id": "ei5vkfo", "text": "Easy to say, but when this many large stores close at the same time pretty much. I don't believe there's enough demand. There needs to bankruptcies and will be a slow process coming out of the recession.", "replies": [{"id": "ei5vnqp", "text": "If you\u2019re just going to discount everything anyone says you\u2019re not really engaging in discussion. You can fuck off. ", "replies": [{"id": "ei5vtc6", "text": "You're an idiot with poor taste.", "replies": [], "depth": 6}], "depth": 5}, {"id": "ei5zzpd", "text": "Fine, all the big stores will remain unsold, unmaintained, be condomed, and fall apart. Are you happy? ", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "ei6mz3z", "text": "One of the OSHs around here went out of business, now it's becoming a gym.  It's going to be okay. ", "replies": [], "depth": 3}], "depth": 2}, {"id": "ei5ws1h", "text": "op is fucking retarded. he should rename thread \"please post to confirm my preexisting belief, that RE is due for a slump.\"", "replies": [], "depth": 2}], "depth": 1}, {"id": "ei5uv26", "text": "For my 2 cents (decades as a corporate real estate manager/site selector), the big problem is that many of the retailers going bankrupt are enclosed mall tenants.  That only adds to the drain on those centers.\n\nThe users that are free standing or in strip centers, generally it's good news because quality non-enclosed mall retail space is in short supply, at least in the markets I've been working in.  For example, the empty Toys R Us buildings have gone pretty quickly\n\nEverytime I hear about a tenant like Payless closing I run to my computer to see if there are any locations where I'm looking.", "replies": [{"id": "ei5v4z3", "text": "I agree somewhat with your comment. Malls are screwed. It's a bad picture that gets worse for them everyday.\n\nYour second point is also correct assuming supply doesn't overpower demand, and at this rate it hasn't yet but it seems to be going in that direction. The stores that are closing are major and this much sq footage is unprecedented to have come online together at the same time. Would be too much to handle even in those single locations you say.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ei5vpak", "text": "Assuming you mean big box, the boring answer is that many will be absorbed by another retailer or retailers that can fit a different market, such as outlet or discount stores like Home Goods or Ross that don\u2019t directly compete with e-commerce as much. \n\nAside from full on redevelopment, my favorite prediction is that logistics and e-commerce companies looking for last mile, on demand warehouse solutions will repurpose the space. Many of these big boxes have bay doors and partial warehousing already, and they\u2019re in more populous urban areas. I assume this is already happening in some markets, but I think they\u2019re a golden opportunity for some of these retailers and delivery companies. In some areas, it\u2019s questionable if the use would comply with local zoning and other ordinances. I\u2019m sure there are ways they could incorporate partial storefronts or something to get around that too. ", "replies": [{"id": "ei5vvvu", "text": "So another competitor will pick up the space? Who would take that risk?\n\nAlso, why would any of them pay the high price of retail space when they can get warehouses at fractional cost?", "replies": [{"id": "ei5wq4x", "text": "Well for part one, it\u2019s already happening. Big box space is fairly stable in major markets because they keep getting backfilled by the types of companies I said. Not all of them obviously and I\u2019m not saying it\u2019s the end all be all solution, but it\u2019s softening the blow. \n\nFor part two, absolutely they would in urban markets, maybe not at the price the retailer paid but much more than a typical warehouse. This depends on the area, but in coastal markets in particular, there\u2019s little to no warehouse in the most populous parts of the region. Not to mention, warehouse vacancy is below 5% in most of these markets, and there\u2019s not much developable industrial land left. It\u2019s the hottest product right now. That\u2019s why in metro LA and Im sure other markets, you\u2019re starting to see vertical warehouse development. If you think about where most of these retail spaces are located, they\u2019re ideal for last mile because naturally they\u2019re near or accessible to large populations. In many markets there\u2019s virtually no comparable warehouse or logistics solution. \n\nThat said, of course many will be redeveloped to better uses like multi family in key locations that support the development cost. Some will just sit vacant for awhile. \n\nTo put it more succinctly, there isn\u2019t a one size fits all answer. Like pretty much everything else in real estate, it depends a lot on the market and location of the store. ", "replies": [{"id": "ei5wvgc", "text": "Will be fascinating to see. ", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ei5w57d", "text": "Did you just post this to try and find people who agree with what you believe? You didn\u2019t even attempt to add to this community by laying out what you believed (based on facts and research) in your main post. You put in minimum effort and then resorted to insulting people who put in more effort than you to thinking about the question. ", "replies": [{"id": "ei5wb9a", "text": "I am genuinely interested in hearing other's opinions. My responses are what I think to their comments. I don't truly know what will happen, and am curious to gather ideas.\n\nIn regards to me insulting people, I merely defended myself when someone told me to fuck off. I never attacked first. Please correct yourself before coming after me, and chime into the topic if you wish.", "replies": [{"id": "ei5whdi", "text": "You\u2019re right, but you were also trolling the post before you attacked. \n\nI did not feel the need to answer the question because it already has been answered, you just decided the answer was wrong and responded condescendingly because you don\u2019t agree with it. \n", "replies": [{"id": "ei5wkf0", "text": "So I'm right and wrong? Ok.", "replies": [{"id": "ei5wunv", "text": "Glad you didn\u2019t even take the time to try and understand what I said. \n\nI said you were right, I did not think I needed to specify that it was to your request that I correct it that you weren\u2019t insulting people. Yes, you were technically not insulting people, but you were trolling the post by being super condescending. And then doubling down by insulting people once they called you on it. \n", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ei5wac5", "text": "All that aside, people often forget online sales only make up for 14% of all retail sales. \n\nBrick and motor retailers aren\u2019t going anywhere. They are just changing. ", "replies": [{"id": "ei5wfzo", "text": "With more stores closing, that number will change. For example, Tesla will take all orders over online only now. Gap is closing a few hundred stores, so that means people who what to order from Gap will use Gap.com. That number will not remain at 14 percent in the next couple years.", "replies": [{"id": "ei65bq6", "text": "I don't think that average gap customer is loyal enough that they will seek out gap online. They will just spend there money at the stores still left in their community.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ei6avp3", "text": "Im buying cheap values centrally located and repurposing to office and multifamily ", "replies": [], "depth": 1}, {"id": "ei73rnj", "text": "* Retrofit to last mile industrial / DC product.\n* Redevelopment into Residential\n\n&amp;#x200B;", "replies": [], "depth": 1}, {"id": "ei93dr5", "text": "Just to add another comment, other than enclosed malls, I think the rumors of the death of brick &amp; mortar retail are greatly exaggerated.  A lot of the retailers discussed more recently in this thread (Gap, Nordstrom etc) are still enclosed mall oriented.  There are certain strip center tenants killing it now - Five Below, Ollies etc.  \n\nAs one commenter said, online still is not a huge % of total retail sales.  I think online will continue to grow but not at lightning speed.  Certain items are not profitable to sell online because of delivery charges (large bulky but lower cost items &amp; lower cost items in general).  Check out this move Amazon made last week:\n\nhttps://digiday.com/marketing/seeking-control-brands-amazon-pulls-plug-thousands-vendors/", "replies": [], "depth": 1}, {"id": "eidnt1i", "text": "OP\u2019s thoughts on business, economics, RE, life and socializing are so skewed it makes me wonder how someone can come out like that. ", "replies": [], "depth": 1}]