Retail Vacancies Being Snapped Up Quickly by New Tenants

New York, NY, May 29, 2024-"Red Lobster became the latest national chain to enter bankruptcy when the seafood-restaurant company filed for chapter 11 this month, saying it would break leases at 108 of its 550 locations,” reports the Wall Street Journal.

“Kimco Realty owns one of those restaurants marked for closure. While that would have caused concern for the property owner a few years ago, these days it is more of an opportunity. The firm is already fielding inquiries about the space located outside of Tampa, Fla., including from fast-food joint Raising Cane’s, coffee chain Dutch Bros and Fifth Third Bank.

“‘It’s a nice time to be getting spaces back because you have the ability to pick a best-in-class retailer,’ said Conor Flynn, Kimco’s chief executive. ‘You’re able to push rents.’

“Retailer bankruptcies rose to 26 last year, the highest number since 2020, according to Morgan Stanley. More than a dozen retailers have said they would close stores after entering bankruptcy proceedings so far in 2024, including Express, Rue21 and Ted Baker. 

“The closures leave gaping holes in malls and shopping centers as more companies succumb to online competition, inflation and changing consumer tastes. 

“Yet landlords are mostly unfazed. Years of little construction have helped push retail availability to near record lows, making it easier than ever to replace departing tenants-often with more successful ones who pay higher rent and draw more customers to the shopping center. 

“‘If you have to get space back in a bankruptcy, today is a good time to have that happen,’ said Matthew Harding, CEO of real-estate firm Levin Management.”