Occupancies will Return to their Peak Level

We are halfway there. In the case of open-air retail centers, occupancies fell in 2020 by 1-2% and they will likely fall the same amount in 2021. Beginning in 2022 the recovery will reverse those losses and within 5-7 years, occupancies will return to their peak level.

This cycle of going from 8% vacancy to 12% in a short time and then spending the next 5-7 years climbing back to 8% has repeated itself over and over again during the last 35 years. Some things never change. There is no retail apocalypse, it’s just normal business cycle contraction.

There is no Retail Apocalypse

Enclosed malls are only 10% of US retail space. There are over 50,000 open-air centers and just over 1,000 malls. The bottom half the malls will close in the next 5-10 years and yet, those closings will have NO impact on the US economy. It's the circle of life. There is no retail apocalypse.

Ghost Kitchens

News Flash: World's largest ghost kitchen delivers hot food in 30 minutes or less, right to your door, or it's free. Oh wait, this has been around for 35 years. Ghost kitchens and fast delivery are not new - the media dummies just want you to think they are. Wake up!

No, Chicken Little the Sky is not Falling!

No, Chicken Little the sky is not falling! There as 50,000 open air retail centers in the US. Last year, as the economy reeled each shopping center lost on average 1-2% occupancy or in other words, on average, they LOST ONE SMALL TENANT! Yes, there were 50,000 more store closings in 2020 than openings, but it had little or no impact.

Top Secret: Florida Big Box Market

Top Secret: The big box market was unchanged in 2020 in Florida. The market was very resilient even against the pressures of total shutdowns. In 2020, JC Penny and SteinMart closings were a big drag on Apparel; Earth Fare and Lucky’s drove down Grocery, and Pier 1’s shutdown pulled down Other.

We are going to have a great 2022 and 2023!

https://progressivegrocer.com

We will revert to our old behavior, but it will not be until 2022. It will take until August to fully vaccinate the US. Fauci will not give the “all clear” until October. Offices will start full operations in January as they hedge against employee lawsuits. We are going to have a great 2022 and 2023!

Where Will Amazon Put Its Next Fresh Stores?

https://progressivegrocer.com

Nearly half of all big box sales are groceries. In Florida for example, Amazon’s Whole Foods has 30 stores and does just over $1.0B in sales. On the other hand, Publix has 812 stores and does over $27B in Florida. For Amazon to increase their sales they need to be the king of groceries. Many bet they can pull it off.

Southeastern Grocers Delays IPO

https://progressivegrocer.com

What happened? Was it the fall in Albertsons and Kroger’s stock price that scared investors? Or perhaps investors see a post-COVID regression to the mean in grocery chains in which they give back their 20% sales gains in 2022.

Group Acquires Pet Supplies Plus for $700M

The pandemic has been a boom for pet stores. How long can their growth last?

https://www.retaildive.com

Why Was Belk Not Liquidated?

Why was Belk not liquidated? In part, because most of its stores are in open air centers as opposed to enclosed malls.

https://www.retaildive.com/

Amazon Fresh

Amazon is worth more than the ten largest retailers combined. With the launch of Amazon Fresh they are laying a new stake in the ground which will surpass Amazon's Whole Foods chain in short order. Hold on to your hats because a serious grocery war is coming with big pushes from Aldi and Amazon! Don't be surprised if existing chains sales drop by 20% or more once these new players gain a foothold. The second richest guy and the 4th richest family in the world play hardball.

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Time to learn about Amazon Fresh. Take the tour, and study up because before you know it you'll be shopping at one of these in your neighborhood in 2022.

Inequality in Open-air Retail Centers

Open-air centers today are bifurcated into two worlds: centers with vacant boxes and those without any. The centers with one or more vacant boxes account for 70% of all the vacant space and they are on average 25% vacant. These are the problem centers. On the other hand, those without a vacant box are only 3-4% vacant, on average. Therefore, only about 15% of the centers are suffering right now and the remaining 85% are doing fine. Thus, inequality even plagues the land of open-air centers. To recover owners must find users to fill their empty boxes. 

In my next post, I’ll discuss how many boxes opened and closed during 2020 and what lies ahead for centers with vacant boxes and whether open-air centers will drown in vacancy during 2021.