Demand for Retail Space Predicted to Fall

Traditional retailers have plenty of reason to be nervous about renewing leases. There’s the slow but steady climb of e‑commerce which continues to increase market share and is predicted to account for 8% of all retail sales by 2013. And then there’s the projected long-​term leveling off  U.S. consumer spending. All of these changes have experts filenes_funny_sign_884542_llooking for continued store closings through at least the first half of 2010.

Analysts at the International Council of Shopping Centers foresee the following:

  • Total 2009 store closings:  4,730
  • First half 2010 store closings:  6,000–8,000

Industry experts also point to several key factors that will result in long-​term ‘adjustment’ to the number of bricks and mortar establishments. These factors include:

  • Continued bankruptcies and liquidations will reduce the number of existing businesses
  • Potential new businesses will be unable to secure financing

The general economic state of the retail industry means potential new business owners have increasing power to negotiate price and other amenities. In return, commercial landlords will be marketing concessions and features to lure new tenants into rental space.

[Sources: Tode, Chantal, E‑commerce is flat as a percentage of total retail sales, DMNews 2.2.09;  Misonzhnik, Elaine. Store Closings Likely to Peak in First Half of 2010, Retail Traffice, 10.13.09]
Kathy Crosett
Kathy is the Vice President of Research for SalesFuel. She holds a Masters in Business Administration from the University of Vermont and oversees a staff of researchers, writers and content providers for SalesFuel. Previously, she was co-​owner of several small businesses in the health care services sector.