While I am not suggesting that another recession is on the immediate horizon, I would be lying if I said it hasn’t crossed my mind. Watching the news on any given day, we see familiar patterns emerging, which is why we should always be prepared. Reminiscent of the 2008 recession many major categories, such as apparel, are not expanding like they once were. If a recession were to hit in the next 12 to 24 months, here are my predictions for how the retail industry will be affected.
Reimagining the retail space
As the existing pool of big-box retailers narrows, the stock of vacancies is expanding which is forcing owners and businesses to get creative. So many big-box retailers have shuttered in the last few years and their spaces remain vacant for lack of suitable replacements. I believe we will see more self-storage services retrofitting old Kmart, Sears, and Toys ‘R’ Us boxes to meet their specific needs. Medical and wellness facilities are another plausible option to fill these vast spaces. Even industrial uses such as fulfillment centers could take advantage of boxes situated near interstates and major highways. We have all witnessed the trend of retail power centers filling vacant anchor positions with entertainment concepts like Urban Air and Dave and Busters. However, once they land that category, there may be a larger looming need to redevelop the asset by reducing overall retail square footage and incorporating vertical multi-family, coworking/office space, and smaller pad users that provide food or services in lieu of the traditional 20,000-40,000 s/f users that once lined up two to three deep to backfill vacant anchor and junior anchor spaces .