A spate of store closures looms in the months ahead due to a still-underappreciated degree of distress in the American retail sector, A&G Real Estate Partners Co-President Andy Graiser said in an recent online panel discussion.
“Reduced discretionary spending is really becoming the biggest issue for retailers,” Graiser said, pointing to a “disconnect” between landlords’ positive perceptions of retail performance and “how volatile and troubling this situation really is” for many chains.
“I see a lot more distress this year than I expected,” Graiser noted in a news release summarizing the seminar . “We’re getting a lot of phone calls, and it’s hitting every sector.”
The webinar, “Market Outlook — Insights on Retail, Consumers, REITs, NNN & Shopping Centers,” focused largely on consumer behavior and chains’ financial health. Moderator and Telsey Advisory Group CEO Dana Telsey kicked off the discussion by pointing to more careful spending across “a wide range of income levels.” Telsey noted that trading-down behavior continues to bolster traffic at discounters such as Walmart and Costco.
The retail real estate investment trust (REIT) Simon is just one example of a landlord that has “talked about how consumers are still shopping, but have pulled back on everyday spending,” said panelist Linda Tsai, part of Jefferies’ REIT Equity Research Team. “They’re holding out to save for occasions like holidays, birthdays and experiences. Overall, Simon has seen outperformance in its outlet business.”
A&G’s Graiser predicted continuing retail distress into the middle or end 2025. Citing the recent liquidations of 99 Cents Only and Conn’s HomePlus, he noted that more retailers could suffer the same fate in the year ahead.
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Click here to watch the webinar.
