Bill Siegel’s Post

Despite the retail real estate comeback, roughly 500 department store spaces nationwide now sit vacant. Why have so many department stores been forced to close? Partner Andy Bank, chair of our Real Estate Practice, told The Wall Street Journal that the decline of department stores can be attributed in part to online shopping. Now that shoppers can order directly from retail brands, department stores are less necessary for customer acquisition and boosting retailers’ profit margins. He noted that retailers are increasingly opening their own stores rather than relying on department store staff to sell their goods. Retailers prefer to control their customers’ entire experience, from the way their products are displayed to the shop’s lighting and scent and the design of the shopping bags customers walk out with. Wall Street Journal subscribers may read the full article here: https://lnkd.in/ejCMfiiU Read more here: https://lnkd.in/e_ShURA2 #CommercialRealEstate #Retail

"By Kate King Aug. 6, 2024 9:00 pm ET The owners of the shopping center at Legacy West considered adding a department store to attract visitors and luxury retailers to their mixed-use project in #Plano, #Texas. Instead, Prism Places, Inc. and its partners opted for a lavish food hall. The food hall opened in 2017 with more than two dozen #restaurants and #bars, live music and a brewery. Within a couple of years, it was drawing 30,000 visitors a week and a Louis Vuitton shop moved in across from the main entrance. Tiffany & Co., Gucci and other luxury brands followed, with some pulling out of the nearby mall’s Neiman Marcus Group to open at Legacy West. “We said, ‘Instead of going after a department store, let’s do something that’s more fun and more interesting and that will drive a lot of traffic,’” said Mark Masinter, a partner on the project who handles leasing and tenant curation. #Department stores are bleeding customers, and landlords no longer view them as magnets for shoppers. Discounters are underpricing them. Specialty stores are outmaneuvering them. And luxury brands are sometimes bypassing department stores to open their own shops.  The surviving operators are making big moves in hopes of turning things around. Saks Fifth Avenue’s parent company is buying rival Neiman Marcus. Nordstrom executives are exploring taking the company private. Macy's new chief executive is closing stores while trying to improve the shopping experience at its leaner fleet.  But department stores’ long-term decline will be difficult to reverse. Their sales peaked just before the turn of the century and have been on a downward trajectory ever since, according to U.S. census data...." The Wall Street Journal

Department stores used to anchor shopping malls but are now struggling to survive. Department-store operators were once able to negotiate favorable lease terms (including relatively low fixed rent) because they drove foot traffic to shopping centers and allowed owners to profit from smaller tenants who competed for space next to stores such as Sears and Macy's. Department-store sales, however, peaked in 2000 and have trended downward ever since, as speciality and discount stores such as Walmart and off-price retailers like TJ Maxx took market share. Online shopping also caused department stores to lose customers. In response, shopping mall owners are redeveloping space that was previously occupied by department stores into food halls, entertainment venues, and other uses. "Major department stores now occupy less than half of all anchor spaces at enclosed shopping malls, real-estate firm Green Street said. There are roughly 500 vacant department-store spaces nationwide, with more closures on the way as Macy’s shutters 150 underperforming stores over the next three years. Department stores’ decline is a primary reason why regional malls—originally designed to lure department stores out of America’s urban downtowns—continue to struggle even as other types of retail real estate are reporting record-low vacancy rates."

"Macy’s 🏬 and J.C. Penney 🛍️ have two very different real estate strategies 🏢💰 One has a downsizing plan that includes profitable stores 📉👍 The other plans to keep — and possibly open — even low-volume stores 📈🤔 What’s going on? 🤷♀️ #RetailStrategy #RealEstate #BusinessModel" by Retail Dive about Macy's

Retail real estate is experiencing a mixed bag. Have you seen this article shared on LinkedIn News today about #departmentstores? We've summarized it for you here ➡️ While the overall market is thriving, department stores are struggling. With many closing locations, these once-dominant anchors of shopping malls are facing significant challenges. Shoppers are increasingly opting for discount retailers or online shopping, while brands are opening their own stores for more control. To adapt, mall owners are repurposing vacant department store spaces, such as converting them into home furnishing and entertainment areas. Additionally, there are efforts to revive struggling luxury department stores through strategic partnerships. What we want to know is, do you agree? If you're in the #CRE industry, have you witnessed this first hand? Share in the comments. If you haven't read the article, you can find it here: https://lnkd.in/gqpPCp2f (you may need a subscription to WSJ to read the full article). Trying to find #retail space or have a #commercialrealestate space you want to #sell or #lease visit krgre.com and see what our team can do for you! #krgre #cre #commercialrealestate #article #linkedinnews #forlease #forsale #retail #departmentstores #brands #storebrand

Macy's might close its big store in San Francisco's Union Square. This could happen in 2025 or later as part of their plan to shut down some stores that aren't doing so great. They want to focus on making the stores they keep even better and opening smaller ones. Macy's has been trying to keep up with shoppers who want different things now and areas where it's tough for stores to do well. They're planning to close about 150 stores by 2026, but they'll keep about 350 open and make them nicer. In the real estate biz, we often see similar challenges and changes. At Cudd Realty, we're all about helping small businesses and our community in North Texas. When big retail stores like Macy's change their plans, it can make new opportunities for local businesses and real estate. That's where we can help figure out what's best for everyone. Thinking about how changes in the retail world could open up new real estate chances? Wanting to get the inside scoop on how it might impact your plans? Reach out and let's have a conversation about what's happening and where you could fit in. Call or text me, Michael Cudd, at 940-595-0138. Let's turn change into an opportunity together. #CuddRealty #NorthTexasRealEstateNews #RetailChanges #CommunityGrowth #RealEstateOpportunities

Informative article not only discussing the upcoming Macy's closures but the transformative nature of vacant anchor space touching on adjusted anchor store size and usage. Currently the DMM dataset identifies over 4,200 vacant anchors spaces which includes not only department stores but other identified "anchor" stores in various categories (home goods, pets, theatre, grocery, amusement, etc). More insight on to how to access those locations here: https://lnkd.in/eUgn9E7t

🏁 Who will win this race? Interesting article in Retail Dive contrasting Macy's and J.C. Penney's different real estate strategies. These two incredible brands cater to two very different markets yet they've occupied anchor positions in the same malls for decades. 📌 Macy's has been famously demalling, opening smaller format stores while closing full-line stores that don’t make the cut. 📌 JCPenney, which has its origins going back to 1902—yep, over 122 years ago—has been a true survivor of wars, recessions, and a pandemic. The historic retail company is sticking to its mall strategy. Not a surprise since it is owned by two major mall REITs, Simon Property Group and Brookfield Properties. Which of these two iconic brands will prevail? Or, is each pursuing the right real estate strategy for their market? Let me know in the comments below! ⬇️ Read the full story here https://bit.ly/3QW5yfi #TSCG #CREtail #RetailStores #CRE #Retail

Has this happened in your retail shopping center? With retail space being so scarce, tight labor conditions, and high costs, some tenants may sign ✍️ a lease and pay their rent but not open or choose to operate continuously. 📌 From the tenant perspective, this can make sense but there are implications for the landlord as well! Despite the tenant paying their rent, the center’s other tenants and the landlord will still be impacted by an opportunity loss: ▪️ Co-tenancy provisions can kick in ▪️ Loss of percentage rent revenue ▪️ Shoppers may be put off by empty space ▪️ A seemingly abandoned, shabby space can bring down the overall attractiveness of the center In this great article by Daniel Villalpando at Cox, Castle & Nicholson LLP, Daniel offers landlords the following remedies: ▪️ Give the tenant extra time to open before remedies take effect. ▪️ Require the tenant to at least open for one day. ▪️ Make sure the tenant is required to perform all of its other obligations under the lease. ▪️ Give yourself the right to “recapture” the premises. ▪️ Don’t let a tenant’s right to “go dark” impact the economics of your deal. Read the article here: https://bit.ly/3Q8pBqD #TSCG #CREtail #RetailStores #CRE #Retail

Closing the 136,000-sq.-ft. Saks Fifth Avenue department store in downtown San Francisco to the public except for by-advance-appointment-only admission could be a last measure before closing the entire store permanently. What happened to San Francisco, the shining city on a hill after Tony Bennett left his heart there? Decades ago it was considered America’s cleanest city and most popular tourist destination. The Saks announcement follows closures and announced closures in San Francisco by such iconic retail brands as Macy's, Nordstrom, Rack, L’OCCITANE Group, adidas, ALDO Group, J.Crew, EXPRESS, Hollister Co., the LEGO Group, Lucky Brand, Madewell, Old Navy, Whole Foods Market Cinemark, SEPHORA, The North Face, Walgreens, Target, etc. The reason for closures range from high taxes to decline in business but a resounding underlying cause is crime, crime, crime: break-ins, shoplifting, flash mob robberies, drug addicted loiterers, etc. The Union Square district is overwhelmed with crime and homelessness. It’s disheartening that physical stores have to resort to permanent closures or partially opening by-appointment-only as Saks announced. San Francisco has been hit so hard with store closures that a new ordinance was proposed earlier this year to require companies to give six months notice of any planned store closure.