The recent announcement of JoAnn fabric store closures across Michigan has sparked discussions about the state of retail real estate. To gain a deeper understanding of the implications, we spoke with Norman Abro of Keystone Commercial Real Estate, who provided valuable insights into the market dynamics at play.
Economic Misconceptions and Retail Evolution
When asked about the broader implications of, yet another, big box retailer closing their doors, Norman Abro quickly began dismantling the assumption that these store closures were simply a result of economic decline. “The closures of JoAnn and other big-box retailers… have undoubtedly made headlines, often painting a picture of economic distress in retail real estate. However, the reality on the ground tells a different story,” he asserts. Instead, Abro highlights a retail evolution, characterized by a dynamic shift in tenant profiles. “While legacy brands are exiting, we’re seeing a strong wave of new and expanding retailers eager to backfill these spaces—often at higher rents than the previous tenants.” Specifically, he points to the burgeoning demand from experiential and fitness-based retailers, such as “Pickle Rage, Wicked Pickle, Ace Pickleball, PGA Tour Superstore, Planet Fitness, Crunch Fitness, and VASA Fitness,” which are actively repurposing these large spaces.
Comparison to Other Retail Closures
When comparing the departure of JoAnn’s to other recent retail closures, Abro notes, “The recent closure trend follows a broader pattern we’ve observed, but there are key distinctions in how these closures impact the market.” He explains that JoAnn stores, typically larger, present different challenges than smaller spaces left by Party City, while Big Lots’ locations in varying income markets require distinct leasing strategies. Regarding the absorption of these vacant spaces, Abro anticipates a varied timeline. “Absorption will depend on location, co-tenancy, and market demand, but we anticipate a mix of quick backfills and longer repositioning timelines.” He emphasizes the importance of location, stating, “Prime locations in high-traffic retail corridors are likely to lease up faster,” while acknowledging that “some spaces—especially in secondary or lower-income markets—may take longer to lease.”
Advice for Landlords: Proactive Strategies
For landlords facing these vacancies, Abro advises prompt action. “My advice to landlords facing vacancies due to retail closures is simple: act fast and be proactive. The longer a space sits vacant, the harder it becomes to lease.” He stresses the need for strategic planning, including potential space subdivision and targeting emerging retail categories. “Landlords should also assess their options strategically. Can the space be backfilled as-is, or does it need to be subdivided to attract a wider range of tenants? Are there emerging retail categories—such as off-price, fitness, entertainment, or medical—that could be a good fit?” Abro points to specific emerging retail concepts showing interest in these large spaces. “We have seen a lot of Pickle Ball concepts along with some kids play places looking at these boxes because the need a lot of space with high ceilings.” This highlights a clear trend, where large spaces are being re-purposed for entertainment and experience based businesses.
The Role of the Local Economy
While strategic planning and adaptation is important, Norman continues by highlighting the role of the local economy in filling these spaces. “The overall health of the local economy plays a critical role in the ability to backfill vacant spaces. Strong consumer spending, population growth, and job stability drive retailer demand.” Ultimately, retail real estate is hyper-local. Even in markets facing economic challenges, well-positioned properties in prime trade areas will continue to attract tenants, while weaker locations may require repositioning or redevelopment to remain viable.
In conclusion, while JoAnn’s closures have created visible vacancies, Norman Abro’s insights reveal a market ripe for reinvention. Landlords who act swiftly, embrace new retail concepts and strategically adapt their spaces will find success in this evolving landscape. Michigan’s retail real estate is not declining, but transforming.
For Additional information on JoAnn Fabric’s Bankruptcy, visit: Newsweek
