More than 300 department stores will close in 2017, that means some 36M SF will become vacant throughout the year. Rather than sitting idle, JLL said landlords are likely to pull the following tenants to fill the void: restaurants, entertainment venues and grocery stores.
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Nearly half of U.S. shopping center space is leased to department stores, which typically pay low rents per SF. As a result, owners are looking to gain significant opportunities to monetize that vacated space as department stores go out of business, according to JLL’s latest retail report, "Empty to Alive: The Next Use for Department Store Space."
Seritage Growth Properties did just that, and leased space vacated by Sears and Kmart to new tenants that pay more than four times what department stores did for the same space. Food courts also do not cut it anymore, but food halls are the new up-and-coming thing. In the past, U.S. food halls were a mere collection of food-related proprietors in a tourist hot spot, but the modern food hall is a cultural experience. Food halls include a mix of tenants that offer both prepared and unprepared food, usually with an artisanal bend to it. This includes food vendors, farm-to-fork vendors and quality, authentic restaurants.
In today's retail landscape, restaurants are moving into malls and becoming designations in and of themselves, while theaters and other entertainment venues are increasingly moving into empty mall space. When it comes to supermarkets, a GGP 2017 survey found almost 50% of shoppers would like to see a grocery store in local malls, and mall owners are already courting grocers to replace department stores.
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