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Store Opening Train Starting to Roll? Openings Seen Reaching New High

RBC Capital Markets Reports Toys, Men’s Apparel, Crafts and Pawn Shops Leading the Way
July 15, 2013
Demand from retailers, as evidenced by planned store openings, continues to grow while plans for new supply, either among regional malls or community centers, remains subdued with little uptick in planned deliveries in sight, according to analysis by RBC Capital Markets.

Retailers in the financial services firm's database are planning to open 83,749 stores over the next 24 months, and another 42,757 stores are planned to open over the next 12 months. Both of those levels are five-year highs and represent year-to-date increases of 2.1% and 2.8% respectively, according to RBC, which based its outlook more than 50 meetings with retailers and retail landlords at recent retail and real estate conventions.

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National tenants, especially franchises, continue to scoop up vacancy among spaces of 5,000 square feet and smaller. At the same time, large box users are struggling to find sufficient space to satisfy planned store openings, RBC noted.

The trend toward smaller footprints among retailers continues, athough the trend among retailers downsizing existing stores appears to have moderated. There also appears to be very little retailer distress on the horizon, suggesting that recent increases in occupancies and rents will likely continue, the firm noted

In other highlights from its report on retailers, RBC noted:

New store expansion levels were little changed on a retailer-by-retailer basis with Subway, Dollar General, Five Guys Famous Burgers and Fries and Family Dollar still each looking to open more than 1,000 stores in the next 24 months.

The list of retailers with the highest percentage of planned store openings is also little changed with 12 retailers looking to double the number of stores in the next 24 months. From a sector standpoint, toys, men’s apparel, crafts and pawn shops head the list of retailers looking to expand, while surplus goods, office supplies, eye care and dry cleaners are projecting the lowest growth rates.

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