In a recent article posted on The Real Deal’s website, it stated that in 2020 there were 8,741 retail store closings and of that total, 3,151 were clothing stores that had closed. This trend seems to not be slowing down in 2021 with that record set to be broken.
What does that mean for local investors and operators of retail stores in Chicago? It means the value and demand of your retail property is set to decline based on oversupply that continues to quickly grow. Another issue here in Chicago, and Cook County as a whole, is the rising property taxes on the retail asset class.
With this issue of additional retail supply continuing to grow as traditional brick and mortar shoppers move to e-commerce platforms like Amazon and Zappos, the stage is set for a huge problem for entrepreneurs to seek an opportunity in.
Already we have seen the medical world move into retail like never before, but what else will fill the void left from these retail closures? There can only be so many kids play center stores out there. What else can be done to fill the vacancy?
Other uses retail vacancy can be converted to is:
Mixed use by converting space to residential
Industrial store fronts (this is more realistic if retail rents fall, making the gap between average industrial and retail rent in a given market shrinks.)
Convert larger centers to industrial and distribution space
Time will tell, but keep an open mind as to how retail space can be repurposed as you might have the next billion dollar idea.
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