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More Stores to Close, But Vacancy Declines

The first half of 2008 saw announced closings of 2,831, compared with 1,522 announced closings in the first half of 2007.

By Debra Hazel | Updated on August 25, 2008

Store closings are on the rise, according to a recently released survey from the International Council of Shopping Centers, but densely populated urban areas will continue to thrive, says real estate investment services firm Marcus & Millichap.

The first half of 2008 saw announced closings of 2,831, compared with 1,522 announced closings in the first half of 2007. However, those numbers pale in comparison to 2001, when 7,041 store closings were announced. Not surprisingly, apparel stores represented 34.7% of the announced closings, followed by home entertainment stores at 28.8% of the total. ICSC projects that 144,000 establishments will be closed in 2008, a 7% increase from 2007. A recent spate of retail bankruptcies (including Boscov’s) should not be a major cause for alarm.

“Store bankruptcies are going to increase, but that doesn’t necessarily lead to store closings,” said Bernard J. Haddigan, managing director of Marcus & Millichap, Atlanta. And even those units that close stores continue to pay rent until the unit is re-leased.

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