A bid by mall operators Washington Prime Group and Namdar Realty Group to keep a portion of Bon-Ton stores open failed, and a JV by Great American Group and Tiger Capital Group won the auction for Bon-Ton’s inventory and assets.
While scores of retailers like Bon-Ton have decided to close down, many like J.C. Penney and Macy’s are still trying to hold ground. They will be aided by the Bon-Ton’s bankruptcy regarding market share. In fact, even struggling retailers like Stein Mart will benefit in terms of gaining leases.
Real estate services firm CoStar Group estimates that over 90 million square feet of retail space is likely to close in 2018. This estimate, which includes the Bon-Ton stores, is on track to exceed the 105 million square feet that closed last year.
As more and more retailers vacate spaces, mall owners will find it difficult to replace them with newer tenants. The current state of the retail sector is not likely to foster store openings, and expansions so many real estate owners will have to look at options for redevelopment and these usually come at high costs. The current environment is a tough one, and as Bon-Ton bids goodbye, we can expect others to follow.