Consumer confidence declined in March to 124.1 after rebounding to 131.4 in February, but it remained above the January index of 121.7.
While any recessionary predictions for 2019 are premature, retailers will be taking action to ready themselves for any inevitable ebb in the economic tide should it come in 2020, 2021 or beyond, according to Cushman & Wakefield’s U.S. shopping center market beat first quarter 2019 report.
Due to corporate tax breaks in 2018 — which gave some struggling retailers a reprieve — and fear of litigation from landlords, strategic closures were not as much of a factor in 2018, and the total number of store closings declined from those in 2017. Most closures last year were bankruptcy-related; however, going forward we expect strategic closures to come back into play. Look for the total number of closure announcements to increase through this year and next. As of the end of the first quarter of 2019, the number of closure announcements has already exceeded 5,000 units.
But there are still retailers in growth mode. Top categories for expansion are primarily those that are less disrupted by eCommerce: beauty/cosmetics, discount grocery, dollar stores, off-price apparel and fitness and health. There is growth among super stores, although often with smaller footprints. However, clicks-to-bricks also remains a strong trend as formerly pure play retailers recognize the benefits of having a physical store presence such as increased brand awareness, easier return logistics and better connections with consumers.
Any retail concepts that can compete effectively with online retail are those that offer value, convenience and, most importantly, will offer the customers an experience that they can’t get online. But Cushman & Wakefield expects ground-up retail development activity to decline while redevelopment levels reach record highs. Neighborhood and community center construction will continue, particularly in up-and-coming residential areas. As was the case with new deliveries in the quarter, nearly half (8.2 million square feet) of the current construction activity is in either neighborhood or community centers, while another 1.9 million square feet is in unanchored strip centers. However, the need for stand-alone shopping centers or malls has changed, and mixed-use projects will be the way the market deals with current challenges going forward.