Store closures to continue into 2025, experts say

The wave of retail closures that was seen in 2024 is expected to continue in the months ahead.

That’s according to A&G Real Estate Partners co-president Andy Graiser, who spoke at the real estate firm SCB’s recent webinar, "Market Outlook — Insights on Retail, Consumers, REITs, NNN & Shopping Centers."

"Reduced discretionary spending is really becoming the biggest issue for retailers," said Graiser, who pointed to a "disconnect" between landlords' positive perceptions of retail performance and "how volatile and troubling this situation really is" for many retail chains. Other panelists pointed to lack of access to capital amid increased operating costs as other driving factors in store closures.

However, some retailers are responding to opportunities created by the string of closures. Graiser pointed to the reemergence of "designation rights,” an approach that was more common in the 1990s. 

"A retailer comes in, buys a large number of leases [in a Chapter 11 auction], puts itself in the shoes of a bankrupt company and can then assume or reject those leases," said Graiser, whose company auctions off leases for retail chains who close locations. "It creates great optionality, flexibility and growth opportunities. You're seeing more flexibility in the square footage, just because of the lack of supply [of available real estate] out there. But this doesn't come without significant construction costs."

[READ MORE: A&G accepting bids for 255 Big Lots store leases across 41 states]