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Recent headlines have been filled with bankruptcy announcements, failed mergers and acquisitions and going out of business sales. But the future is expected to be brighter across the retail sector as brands across a variety of industries look to expand.
Closed doors lead to opportunities
In the coming months, tenants like Big Lots, Party City, CVS Pharmacy and Walgreens, among others, will shutter locations across the country, leaving significant vacancies in both the net-lease retail and shopping center markets.
While some of the storefronts are likely to remain vacant for the foreseeable future, opportunistic tenants in growth mode will be quick to identify the most attractive locations and backfill those spaces.
Ollie’s Bargain Outlet, Barnes and Noble, Burlington, Michaels and Haverty’s are among the retail brands that have recently acquired leases as other big box stores go out of business. This strategy has allowed tenants to not only capitalize on high-quality, high-traffic sites, but also solves the challenge of expanding in a low-vacancy market.
As shopping center anchors and big-box retailers continue to explore these opportunities, it’s not quite as easy in the single-tenant net-lease market. Net-lease retailers often have strict construction and branding guidelines, requiring build-to-suit solutions. For example, we wouldn’t see Dutch Bros Coffee explore a former Walgreens property as it looks to identify thousands of new potential locations over the coming years.
Instead, it is more likely that shuttered freestanding and junior box locations will be targeted by tenants with more flexibility, such as independent businesses looking to serve their local consumer base from an upgraded location.
Redevelopment or demolition also becomes an option, especially for sites with good ingress/egress in high-traffic areas. While a vacant CVS Pharmacy won’t solve the physical real estate requirements of a Chick-fil-A, for example, the site itself might justify a tear-down.
2025 and beyond
Over the next several years, thousands of new stores and restaurants are expected to open as retailers look to expand their customer reach.
Quick-service restaurants and convenience stores are among the sectors expanding most aggressively, with Jack In The Box, Slim Chickens, Wawa and Sheetz all targeting massive growth. Discount retailers, like Five Below and Ross Dress For Less, have also announced significant growth plans, as consumers remain cost-conscious. Additionally, retailers that have maintained their footprints in recent years, including Lowe’s and Walmart, have identified now as the time to start growing again.
Will 2025 be a pivotal year for closures and consolidation, or will it instead be a year remembered for substantial growth among established and emerging brands?
Note: Graph above includes a sampling of announced or planned openings and closings beginning in 2025 and may represent long-term plans or estimated counts. Retailers listed twice have announced both significant openings and closings.
Sources: Northmarq Research, various retailer websites, and public news articles; information deemed accurate but not guaranteed, with data gathered in December 2024. Tenants are selected for the Top 100 list based on a combination of factors including but not limited to expansion rate, frequency of investment sale transactions, and brand recognition, and tenants may be added to or removed from future reports; the Top 100 list does not suggest a better or less risky investment.
Lanie Beck is senior director of content and marketing research at Northmarq.