Through a special arrangement, presented here for discussion is a summary from a current article from the Emerson Advisors blog.
After decades of adding retail selling space faster than the population was growing, there is now over 46 square feet of selling space for every man, woman, and child in America. This compares to an equivalent of about 2.5 feet/person in Europe. Inevitably, this imbalance must return to equilibrium and it has begun to do just that.
Over the last few years, several major retailers have closed, including Linens n' Things, Circuit City, Mervyns, and Hollywood Video, to name a few. Others are filing Chapter 11, closing stores, and reorganizing. Entire regional malls are closing and strip malls and downtown shopping centers everywhere are beginning to look like smiles marred by missing teeth, even with rents going for 20-30 percent less than they were two years ago.
So the really big question is: What's going to happen to all this vacant space?
A recent Dow Jones Newswire article gives one alternative - for-profit colleges. The University of Phoenix has added over 120 properties to its training and education portfolio over the last three years, bringing their total to over 200 locations in 39 states. These locations focus on providing skills to out-of-work adults in areas like health-care, automotive, and technical trades.
There is also demographics to consider. There are over 70 million Baby Boomers who are now entering retirement age. This spike of aging population is surely going to require more health care, assisted living facilities, and who knows what else.
How about good old American entrepreneurship? One recent phenomenon is the growth of pop-up stores, which can be seasonal or marketing introductions.
But these are just the obvious ones. Nature abhors a vacuum and while a lot of this real estate will simply be torn down, most of it will be turned into something else.
Discussion Questions: What solutions do you see for the glut of real estate at retail? What obvious and less-obvious non-retail solutions could replace that space?