(TheRealDeal) – Retail projections are up from a year ago, but still grim for many.
UBS predicts the United States will see between 40,000 and 50,000 store closures over the next five years, CNBC reported. Forecasts previously called for 80,000 closures by 2026.
The worst outlook affected apparel and accessories retailers, home furnishing companies and consumer electronics retailers. UBS predicts that these three retail categories will see 23,500 closures over the next five years.
Meanwhile, business is expected to boom for general merchandise stores, according to CNBC. Stores such as Target and Walmart are expected to record net openings in the coming years, as well as auto parts companies.
Despite the growing importance of e-commerce, brick-and-mortar stores have weathered the pandemic storm better than expected, boosted by cheap rents and continued customer interest in in-store experiences.
After the pandemic triggered a wave of store closings in 2020, retailers turned the tide in 2021, reporting net openings across the country, rather than net closings. Plans for store openings in 2022 also look solid, as data from Coresight Research reported by CNBC shows 1,385 store closings were announced in the first three months of the year, compared to 3,694 announced openings.
While commercial real estate forecasts across the country are better than expected, prominent businesspeople remain skeptical about the future of the sector in New York. Steven Roth of Vornado Realty Trust suggested earlier this year that the local retail scene may never fully recover from the pandemic.
“‘We expect that over time, high street retail will recover,’ Roth said on an earnings call in February. the highest of four or five years ago.”
Meanwhile, Unibail-Rodamco-Westfield is shedding its shopping center portfolio in Southern California, along with the rest of its US assets, as it focuses on Europe. The market was Westfeld’s largest, comprising 10 shopping centers from Los Angeles to San Diego that combine for approximately 12 million square feet of retail space.