NEW YORK–Credit unions that make loans on commercial loans will want to pay attention to new data showing the amount of commercial real estate flooding the market as more retail store closures are announced.
The latest numbers show U.S. store closures announced to date in 2018 reached a staggering 77-million square feet, according to data on national and regional chains compiled by CoStar Group Inc. That means retailers are well on their way to surpassing the record 105 million square feet announced for closure in all of 2017, Bloomberg reported.
“And with shifts to Internet shopping and retailer debt woes continuing, there’s no indication the shakeout will end anytime soon,” the report added.
“A huge amount of retail real estate in the U.S. is going to meet its demise,” James Corl, managing director and head of real estate at private equity firm Siguler Guff & Co., told Bloomberg. Property owners will “try to re-let it as a gun range or a church—or it’s going to go back to being a cornfield.”
Data show the U.S. still has about 24 square feet of shopping space per person, many times more than any other developed nation, according to research firm Green Street Advisors. “Consumers aren’t spending enough offline to support such a generous amount,” observed Bloomberg.
There are a couple of silver linings, according to analysts, including decreased lease costs and the redevelopment of retail space into other uses, such as housing.