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JLL Retail: Store closure summary, March 2018

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JLL Retail Research looks at coming closures, the impact of e-commerce on brick and mortar stores, how the store experience is changing and which retailers are actually expanding operations despite the current climate (as of March 2018).

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JLL Retail: Store closure summary, March 2018

  1. 1. Retail store openings & closings © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 1
  2. 2. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 2 Windsor Square Matthews, NC 2018 openings – main themes • Vacant spaces – including anchors – are being backfilled by off-price retailers, craft & hobby stores and fitness centers, among others. • Mall move-ins (by volume of space taken) have consistently exceeded move-outs. • Dollar stores, fast food restaurants and apparel retailers top the list of retail categories with announced openings. • Clicks-to-bricks retailers like Untuckit, Warby Parker and Indochino are aggressively expanding their physical footprint. • Previously bankrupt retailer, Gander Mountain, finds new life as sporting goods store, Gander Outdoors, and is opening 69 new locations this year.
  3. 3. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 3 Windsor Square Matthews, NC Malls still have more move-ins than outs Mall square footage opened or closed since Q2 2017 MOVE-INS MOVE-OUTS 29.2 MILLION S.F. 20.9 MILLION S.F. 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 Millions Mall SF vacated Mall SF absorbed Source: CoStar, JLL Research
  4. 4. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 4 Windsor Square Matthews, NC Opportunistic retailers backfilling vacant space 12 6 5 4 2 2 2 2 1 1 Department store Grocery Sporting goods Discount department store Bookstore Home furnishings Electronics Apparel Office supplies Drug store # of stores vacated Source: PNC, JLL Research *sample of 37 backfilled space announcements from Q4 2017 to present 10 6 6 4 4 2 2 2 2 1 1 1 1 1 Off-price retail Craft/hobby Fitness center Grocery Apparel Farm supply Dollar store Entertainment Sporting goods Mass merchandiser Discount department store Specialty food & beverage Health & beauty Home furnishings # of retailers taking space Off-price retailers and craft stores are backfilling vacant space left by department stores and grocery
  5. 5. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 5 Windsor Square Matthews, NC Opportunistic retailers backfilling vacant space Super regional mall 9 Neighborhood center 8 Community center 7 Regional mall 4 Freestanding 3 Lifestyle center 2 Streetfront retail 2 Other 2 # of spaces Super-regional malls and neighborhood centers lead in spaces backfilled Source: PNC, CoStar, JLL Research *sample of 37 backfilled space announcements from Q4 2017 to present
  6. 6. MACY’S SEARS JC PENNEY BON-TON © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 6 Who’s filling vacant department stores? Off-price retail and fitness centers rush to fill vacant department store space Source: PNC, JLL Research *sample of 37 backfilled space announcements from Q4 2017 to present
  7. 7. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 7 Windsor Square Matthews, NC Which retail categories are winners? 1645 1328 548 238 200 125 112 104 80 60 52 36 20 16 15 14 6 5 5 3 Dollar stores Restaurants Apparel Grocery Auto parts Mass merchandiser Health & beauty Sporting goods Specialty Crafts/Hobby Shoe store Accessories Pet supplies Wholesale club Entertainment Off-price retail Fitness center Home Improvement Discount/variety Department store # of announced openings Dollar stores and restaurants plan aggressive openings for 2018 Source: PNC, Coresight Research, JLL Research *worldwide
  8. 8. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 8 Windsor Square Matthews, NC Frontrunners in the expansion game 1000 900 320 300 290 200 200 180 125 100 90 90 85 80 69 60 50 50 McDonald's* Dollar General Dollar Tree Family Dollar H&M* Jersey Mike's Subs O'Reilly Automotive Aldi Five Below Ulta Gap Walmart IHOP Tractor Supply Gander Outdoors Hobby Lobby Carter's/Oshkosh Untuckit # of announced openings E-tailer Untuckit and new concept Gander Outdoors among retailers with 50 or more new locations planned in 2018 Source: PNC, Coresight Research, JLL Research *worldwide
  9. 9. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 9 Windsor Square Matthews, NC 2018 closures – main themes • 2018 closure counts (334 locations closed in Jan & Feb) are significantly lower than the same period in 2017 (569 locations closed). • Closure announcements for this year are being led by apparel and drugstores. • Walgreens’ announced closure of 600 locations is due to consolidation of surplus locations after purchasing a portion of Rite Aid’s retail assets. • While Indianapolis leads metros in expected closures for 2018, California tops the list of closures by state. • So far in 2018, only a handful of retailers are closing stores due to bankruptcy, with Toys R Us at the top of the list with 200 store closures announced to date (and possibly getting ready to close all of its stores).
  10. 10. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 10 Windsor Square Matthews, NC 2018 closures by category 841 600 379 252 234 221 207 200 180 131 123 110 66 25 24 20 16 10 2 Apparel Drug stores Specialty food & beverage Electronics Stores Health & Beauty Accessories Home Furnishings Toys/Games Restaurants Department stores Discount dept. stores Shoe stores Wholesale clubs Grocery stores Specialty stores Office supply Sporting Goods Jewelry stores Books & Music # of announced closings Source: PNC, Creditntell, JLL Research Apparel and drug stores have announced the most closures so far for 2018
  11. 11. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 11 Windsor Square Matthews, NC 2018 closures by retailer 600 379 268 250 200 200 170 124 110 110 100 100 100 100 80 70 63 61 60 50 Walgreens Teavana Ascena Retail Group Best Buy Mobile Mattress Firm Toys R Us H&M Vitamin World Foot Locker/Lady Foot Locker Kmart bareMinerals Charming Charlie Michael Kors The Children's Place Applebee's Gap Sam's Club Sears Abercrombie & Fitch Chico's # of announced closings Source: PNC, Creditntell, JLL Research Walgreens tops the closure list as it optimizes its store count after Rite Aid store acquisitions
  12. 12. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 12 Looking at closures over time 2017 saw the greatest number of closures in recent years; 2018 counts are lower, to date 0 500 1000 1500 2000 2500 # of effective closures Source: Creditntell, JLL Research *Effective closures are specified locations expected to close at a given date
  13. 13. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 13 Comparing the numbers: 2018 vs 2017 closures Source: Creditntell, JLL Research *Effective closures are specified locations expected to close at a given date Effective* closures so far in 2018 are 41.3% lower than 2017 361 265 208 69 0 100 200 300 400 500 600 2017 2018 # of stores already closed January February Top categories to date in 2017 Category # of stores Apparel 289 Sporting goods 79 Grocery 59 Toys/Games 47 Department store 25 Top categories to date in 2018 Category # of stores Wholesale club 63 Discount department store 51 Apparel 51 Department store 35 Grocery 30
  14. 14. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 14 2018 closures on the map AK HI # of stores closing in 2018 0-10 11-25 26-50 51-75 76-100 Over 100 California tops the states with the most expected closures in 2018 to date Source: Creditntell, JLL Research
  15. 15. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 15 Top 10 metros for 2018 closures Source: Creditntell, JLL Research Indianapolis tops the list of metros with announced locations closing in 2018 9 8 7 7 7 7 7 7 7 7 Indianapolis Richmond New York Rochester Columbus Houston Burlington Las Vegas Chicago Cincinnati Locations closing in 2018
  16. 16. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 16 Windsor Square Matthews, NC Retailer bankruptcies 766 600 379 252 234 117 207 180 91 123 110 66 25 20 16 1 2 75 104 200 40 24 9 Closures not due to bankruptcy Closures due to bankruptcy Source: PNC, Creditntell, JLL Research Few closures announced for 2018 are due to bankruptcy
  17. 17. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 17 Windsor Square Matthews, NC Retailer bankruptcies Source: PNC, Creditntell, JLL Research Toys R Us closing the most stores due to bankruptcy 200 100 49 40 26 24 9 4 Toys R Us Charming Charlie A'Gaci Bon-Ton Calypso St. Barth Kiko USA Michael Hill Jeweler Charlotte Olympia # of stores closing in 2018
  18. 18. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. 18 Retailers on the closure radar Source: Creditntell, JLL Research The below retailers all have credit ratings below satisfactory. Future closures may be imminent. Retailer Credit Intell Rating Academy Sports + Outdoors D1 Fred's E2 Bravo Brio Restaurant Group D1 99 Centers Only Stores F1 DineEquity D1 bebe stores F1 J.C. Penney Company D1 Aeropostale F1 Jo-Ann Stores D1 Ignite Restaurant F1 Restoration Hardware D1 Le Chateau F1 Staples D1 Sears Holdings F1 Tailored Brands D1 Claire’s Stores F2 Christopher & Banks D2 American Apparel DIP Conn's D2 Bon-Ton Stores DIP Lands' End D2 Gordmans Stores DIP Sportsman's Warehouse Holdings D2 Gymboree Corp DIP BlueStem Group E1 Michigan Sporting Goods DIP Destination Maternity E1 Wet Seal DIP Hudson's Bay Company E1 Aeropostale DIP J. Crew Group E1 American Apparel DIP Neiman Marcus Group E1 Sears Canada DIP Rent-a-Center E1 Toys R Us DIP Rite Aid Corp E1 Wet Seal DIP Stage Stores E1 rue21, inc DIP Stein Mart E1 Sports Authority DIP Credit Intell Rating Definitions CI rating Equivalent S&P rating Credit quality D1 B Below satisfactory D2 B- Below satisfactory E1 CCC+/CCC Poor E2 CC Poor F1 C Critical F2 D Critical DIP - Filed for bankruptcy
  19. 19. © 2017 Jones Lang LaSalle IP, In. All rights reserved. 19 James D. Cook Americas Director of Research, Retail +1 317 810 7191 +1 602 363 6691 JamesD.Cook@am.jll.com Keisha Virtue Senior Research Analyst, Retail +954 990 0844 +954 449 3182 Keisha.Virtue@am.jll.com

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