(TheRealDeal) – Retail projections are looking up compared to a year ago, but they remain grim for many.
UBS predicts the United States will see between 40,000 and 50,000 store closures in the next five years, CNBC reported. The forecast previously predicted 80,000 closures by 2026.
The worst outlook landed on clothing and accessories retailers, home furnishing companies and consumer electronic retailers. UBS is projecting those three retail categories will see 23,500 closures in the next five years.
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Meanwhile, business is expected to boom for general merchandise stores, according to CNBC. Stores akin to Target and Walmart are projected to report net openings in the coming years, along with auto parts businesses.
Despite the growing prominence of e-commerce, brick-and-mortar stores have been able to weather the pandemic storm better than expected, spurred by cheap rents and customers’ continued interest in in-store experiences.
After the pandemic set off a wave of shuttered stores in 2020, retailers bucked the trend in 2021, reporting net openings across the nation, rather than net closings. Plans to open stores in 2022 appear to be strong too, as Coresight Research data reported by CNBC show 1,385 store closures have been announced through the first three months of the year, versus 3,694 announced openings.
While the retail real estate forecasts across the country are better than projected, prominent businessmen remain skeptical about the sector’s future in New York City. Vornado Realty Trust’s Steven Roth suggested earlier this year that the local retail scene may never fully recover from the pandemic.
“We expect that, over time, street retail will recover,” Roth said during a February earnings call. “We do not expect it to recover to the unbelievable highs of the top rents of four or five years ago.”
Meanwhile, Unibail-Rodamco-Westfield is shedding its portfolio of malls in Southern California, along with the rest of its U.S. assets, as it narrows its focus to Europe. The market was Westfeld’s largest, comprising 10 malls from Los Angeles to San Diego that combine for about 12 million square feet of retail space.