Together with
Good morning. US retail closures surged 70% in 2024, driven by e-commerce competition and rising costs. CBRE predicts that institutional capital will flow back, setting the sector up for gains in the New Year.
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Market Snapshot
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*Data as of 12/18/2024 market close.
SHRINKING
US Retail Closures Up 70% in 2024, Thousands More Expected
Brick-and-mortar retail in the U.S. is bracing for a significant shake-up as closures accelerate, with major chains scaling back amid changing consumer preferences.
Big cuts: Nearly 7,100 store closures were announced by the end of November 2024, a 69% spike from the previous year, per CoreSight Research. Discount chains Family Dollar and CVS Health led the list with 677 and 586 closures, respectively.
These retailers have reported the largest number of store closures in 2024, according to Coresight Research.
NYC retail struggles: In New York City, retail chains contracted for the fifth time in seven years, with a 1.3% net decline in 2024, according to the Center for an Urban Future. Staten Island saw the largest drop at 1.8%. Telecom brands like Metro by T-Mobile, pharmacies like Duane Reade, and food chains such as Subway led the declines.
Bankruptcy wave: Closures are not the only challenge—CoreSight reports 45 retail bankruptcies in 2024, nearly double the 25 recorded in 2023. The surge underscores the strain on retailers navigating economic pressures and shifting consumer demands.
Zoom in: Pharmacy giants CVS, Rite Aid, and Walgreens announced a combined 1,253 closures, driven by rising occupancy costs and declining sales. CVS saw its stock tumble from pandemic highs of $100 to $45. Meanwhile, Dollar Tree’s $8B Family Dollar acquisition has become a liability, with a $1.7B loss in 2024 and plans to shutter 1,000 stores, casting doubts on the deal’s viability.
➥ THE TAKEAWAY
Looking ahead: As retail consolidates, vacancy rates remain at historic lows, leading to higher asking rents. CBRE predicts that institutional capital will flow back into retail as opportunities shift, offering a brighter horizon for 2025.
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✍️ Editor’s Picks
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Distressed loan sale: Flagstar Financial (FLG) is selling $343M in distressed NYC office and retail loans, reflecting ongoing challenges in the city’s commercial real estate sector.
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Rate outlook: The Federal Reserve cut interest rates by 25 basis points, capping a year of easing but signaled a cautious approach for 2025, triggering a sharp stock market drop.
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Energy exemptions: DC lawmakers approved amendments to exempt financially distressed property owners from meeting energy efficiency benchmarks for a 6-year cycle under the BEPS program.
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Fear and Greed: The Burns + CRE Daily Fear and Greed Index crossed into expansion territory for the first time in several quarters.
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Foreclosure struggles: RFR Holding (RFR) faces another foreclosure on retail units at 188 East 78th Street, adding to a string of defaults totaling over $300M from Signature Bank’s troubled loan portfolio.
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Economic momentum: The 2025 economic outlook brightens, with Oxford Economics now projecting Q4 growth at 2.5%, a significant leap from last year’s forecast of 0.7%.
🏘️ MULTIFAMILY
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Multifamily resilience: Multifamily properties are set to outpace other CRE sectors in 2025, showcasing superior NOI growth and stability amid market challenges.
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Housing shifts: Single-family construction surged in 2024, led by the West and Midwest, while multifamily permits fell 16.2% YTD, reflecting shifting developer priorities and regional disparities.
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Brave new world: As delinquencies rise, multifamily landlords are using AI tools like EliseAI to automate rent collection and boost cash flow, though ethical concerns about tenants persist.
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Breathing new life: Hankey Capital proposed a new 8-story, 129-unit apartment project at 2901 West Santa Monica Blvd, advancing a former builder’s remedy project.
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Office to apartments: Irvine Company will convert 107 KSF of offices and build two new buildings at MacArthur Court in Newport Beach, creating 700 apartments, part of a broader housing initiative.
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Affordable boost: Bridge Housing secured $71.5M through bond financing to develop HollywoodHub, a 224-unit affordable housing project, one of the largest income-restricted developments in Portland.
🏭 Industrial
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E-commerce rebound: A logistics firm’s 600 KSF lease at Majestic Realty’s Grand Crossing South industrial park in LA marks a major milestone in the recovery of e-commerce-driven industrial demand.
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Home Depot expansion: Trammell Crow and Realty Income (O) have started a $100M, 655.2 KSF industrial facility for Home Depot (HD) in Stockton, CA, which is set for completion in 2026.
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Industrial investment: STAG Industrial acquired the fully leased 5 South Commerce Center in Salt Lake City, a 172.9 KSF Class A industrial property developed by ViaWest Group in 2023.
🏬 RETAIL
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Merger fallout: The blocked Kroger (KR) and Albertsons (ACI) merger is a win for landlords that rely on grocery anchors, preserving tenant stability and avoiding widespread closures.
🏢 OFFICE
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Essex deal: Deutsche Bank (DB) acquired office and retail condos at 180 and 202 Broome St. in Manhattan’s Essex Crossing for $237M, securing 350 KSF of space in the $1.9B mixed-use development.
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Debt troubles: CGI Merchant’s 55 Miracle Mile property in Coral Gables has been placed into special servicing due to delinquency on a $25M CMBS loan.
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Luxury launch: Landau Properties secured a $74M loan to develop One Kane Concourse, a 126 KSF Class A boutique office and retail project near Bal Harbour Shops, set for 2026 completion.
🏨 HOSPITALITY
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Turnaround strategy: Ashford Hospitality Trust (AHT) unveiled its “GRO AHT” plan to boost EBITDA by $50M through layoffs, pay cuts, revenue audits, and efficiency measures.
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📈 CHART OF THE DAY
25% of investors report increasing their CRE exposure in the Q424 Burns + CRE Daily Fear & Greed Index, the highest share in over a year. Most CRE investors are still in wait-and-see mode due to uncertainty, largely pertaining to rates and policy.
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