C&W: Retail Vacancy Glut Could Spell Opportunity

NEW YORK CITY-Notwithstanding hiccups such as the 0.4% dip in overall sales last month, several key indicators in the retail sector are “showing improvement,” Cushman & Wakefield’s valuation services group says in a new report. In the meantime, the glut of vacant space will present well-capitalized merchants with a clear path for expansion.

“For certain category-specific retail sectors, the scale of the reduction in selling space has greatly exceeded the reduction in consumer demand,” the report states. “This imbalance suggests that a sustained increase in consumer demand will provide retailers with a unique opportunity to absorb vacant space in high productivity locations at terms unthinkable during the recent boom years.”

As an example, the report cites the consumer electronics category, which until recently was dominated by just two chains that accounted for nearly 50% of sales: Best Buy and the now-defunct Circuit City. The bankruptcy and then liquidation of the latter left 22 million square feet of retail space vacant–nearly one-fifth the 130 million square feet of big-box space that has gone dark since the recession began, according to C&W.