This past year has been especially difficult for retailers throughout the nation, with 6,481 store closures, with furniture retailer American Freight, the most recent retailer to file for bankruptcy and shutter its 329 stores nationwide. This announcement also comes on the heels of Big Lots announcing their plans to shut down stores throughout the nation as well.
The closure of these big box stores has been linked to the broader macroeconomic climate, with customers spending less and less at the counter, contributing to a lack of store sales. High labor costs have also been cited as a reason for the nationwide closure of big box stores, which have contributed to shrinking margins.
Losing an anchor or junior anchor tenant can be a worst-case scenario for landlords at both the private and institutional levels who are worried about preserving cash flow. Losing any tenant can place an additional strain on paying off debt obligations, maintaining returns for investors, having the cash flow to pay for capital improvements, and more.
Going forward, I think this will provide an excellent opportunity for out-of-market tenants to bring their businesses to various Sun Belt markets throughout the nation. With increased demand to find new locations, landlords will still be able to preserve or perhaps even surpass previous lease rates. The most recent and future rate cuts will bring even more tenants back to the table who were previously sitting on the sidelines due to higher rates or uncertainty regarding the election.
If you are a landlord and want to know how I can help with your real estate needs, feel free to contact Zachary Ellis at 813-493-3437.
