Commentary with Newmark Knight Frank's Roseman

Glenn Murphy, CEO of Gap Inc., in late August announced that his company will cut back on store openings and reduce its square footage by up to 15% over the next three years. The decision came after Gap, which owns the Gap, Old Navy and Banana Republic chains, did an analysis finding that its stores occupied too much space. “We’ve never had a clear real estate strategy,” Murphy said during a conference call. “We now have that information, and it will allow us to make quick decisions.” Fifty-eight percent of you believe there’s more to it than Murphy is letting on, and that Gap will close more stores than the 115 already announced earlier this year. The numbers were evenly split between respondents to last week’s Quick Poll who think Gap will find a real estate solution and those who believe the chain, which has already closed 800 units over the past six years, will “fall through the Gap.” Commentator Jeffrey D. Roseman, EVP at Newmark Knight Frank Retail in New York City, says he isn’t surprised either by the overwhelming poll numbers or Gap’s moves. Here’s why:

“I think it’s been a long time coming. They had a great run in the 1990s, and now they have to reinvent themselves. They have to retool, and get lean and mean again.

“They’ve been closing stores over the years, so this just follows along with that. And a lot of those leases are coming up anyway. They were signed 10 or 15 years, so they’re coming up now. It fits well. They have an opportunity to renew them at market rents, which is a lot more than they were paying, but I’m not sure they’re at that point yet.”