JLL Retail: Store closure summary, March 2018

JLL Retail Research looks at coming closures, the impact of e-commerce on brick and mortar stores, how the store experience is changing and which retailers are actually expanding operations despite the current climate (as of March 2018).

1. Retail store openings & closings © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.1

2. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.2
Windsor Square
Matthews, NC
2018 openings –main themes
• Vacant spaces – including anchors – are being backfilled by off-price retailers, craft &
hobby stores and fitness centers, among others.
• Mall move-ins (by volume of space taken) have consistently exceeded move-outs.
• Dollar stores, fast food restaurants and apparel re tailers top the list of retail categories with
announced openings.
• Clicks-to-bricks retailers like Untuckit, Warby Parker and Indochino are aggressively
expanding their physical footprint.
• Previously bankrupt retailer, Gander Mountain, finds new life as sporting goods store,
Gander Outdoors, and is opening 69 new locations this year.

3. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.3
Windsor Square
Matthews, NC
Malls still have more move-ins than outs
Mall square footage opened or closed since Q2 2017
MOVE-INS
MOVE-OUTS
29.2
MILLION
S.F.
20.9
MILLION
S.F.
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Millions
Mall SF vacated Mall SF absorbed
Source: CoStar, JLL Research

4. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.4
Windsor Square
Matthews, NC
Opportunistic retailers backfilling vacant space
12
6
5
4
2
2
2
2
1
1
Department store
Grocery
Sporting goods
Discount department store
Bookstore
Home furnishings
Electronics
Apparel
Office supplies
Drug store
# of stores vacated
Source: PNC, JLL Research
*sample of 37 backfilled space announcements from Q4 2017 to present 10
6
6
4
4
2
2
2
2
1
1
1
1
1
Off-price retail
Craft/hobby
Fitness center
Grocery
Apparel
Farm supply
Dollar store
Entertainment
Sporting goods
Mass merchandiser
Discount department store
Specialty food & beverage
Health & beauty
Home furnishings
# of retailers taking space
Off-price retailers and craft stores are backfilling vacant space left by department stores and grocery

5. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.5
Windsor Square
Matthews, NC
Opportunistic retailers backfilling vacant space
Super
regional mall
9
Neighborhood
center
8
Community
center
7
Regional
mall
4
Freestanding
3
Lifestyle
center
2
Streetfront
retail
2Other
2
# of spaces
Super-regional malls and neighborhood centers lead in spaces backfilled
Source: PNC, CoStar, JLL Research
*sample of 37 backfilled space announcements from Q4 2017 to present

6. MACY’S SEARS JC PENNEY BON-TON
© 2017 Jones Lang LaSalle IP, Inc. All rights reserved.6Who’s filling vacant department stores? Off-price retail and fitness centers rush to fill vacant department store space
Source: PNC, JLL Research
*sample of 37 backfilled space announcements from Q4 2017 to present

7. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.7
Windsor Square
Matthews, NC
Which retail categories are winners?
1645
1328
548
238
200
125
112
104
80
60
52
36
20
16
15
14
6
5
5
3
Dollar stores
Restaurants
Apparel
Grocery
Auto parts
Mass merchandiser
Health & beauty
Sporting goods
Specialty
Crafts/Hobby
Shoe store
Accessories
Pet supplies
Wholesale club
Entertainment
Off-price retail
Fitness center
Home Improvement
Discount/variety
Department store
# of announced openings
Dollar stores and restaurants plan aggressive openings for 2018
Source: PNC, Coresight Research, JLL Research
*worldwide

8. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.8
Windsor Square
Matthews, NC
Frontrunners in the expansion game
1000
900
320
300
290
200
200
180
125
100
90
90
85
80
69
60
50
50
McDonald's*
Dollar General
Dollar Tree
Family Dollar
H&M*
Jersey Mike's Subs
O'Reilly Automotive
Aldi
Five Below
Ulta
Gap
Walmart
IHOP
Tractor Supply
Gander Outdoors
Hobby Lobby
Carter's/Oshkosh
Untuckit
# of announced openings
E-tailerUntuckitand new concept Gander Outdoors among retailers with 50 or more new locations planned in 2018
Source: PNC, Coresight Research, JLL Research
*worldwide

9. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.9
Windsor Square
Matthews, NC
2018 closures –main themes
• 2018 closure counts (334 locations closed in J an & Feb) are significantly lower than the
same period in 2017 (569 locations closed).
• Closure announcements for this year are being led by apparel and drugstores.
• Walgreens’ announced closure of 600 locations is due to consolidation of surplus locations
after purchasing a portion of Rite Aid’s retail assets.
• While Indianapolis leads metros in expected cl osures for 2018, California tops the list of
closures by state.
• So far in 2018, only a handful of retailers are closing stores due to bankruptcy, with Toys R
Us at the top of the list with 200 store closures announced to date (and possibly getting
ready to close all of its stores).

10. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.10
Windsor Square
Matthews, NC
2018 closures by category
841
600
379
252
234
221
207
200
180
131
123
110
66
25
24
20
16
10
2
Apparel
Drug stores
Specialty food & beverage
Electronics Stores
Health & Beauty
Accessories
Home Furnishings
Toys/Games
Restaurants
Department stores
Discount dept. stores
Shoe stores
Wholesale clubs
Grocery stores
Specialty stores
Office supply
Sporting Goods
Jewelry stores
Books & Music
# of announced closings
Source: PNC, Creditntell, JLL Research
Apparel and drug stores have announced the most closures so far for 2018

11. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.11
Windsor Square
Matthews, NC
2018 closures by retailer
600
379
268
250
200
200
170
124
110
110
100
100
100
100
80
70
63
61
60
50
Walgreens
Teavana
Ascena Retail Group
Best Buy Mobile
Mattress Firm
Toys R Us
H&M
Vitamin World
Foot Locker/Lady Foot Locker
Kmart
bareMinerals
Charming Charlie
Michael Kors
The Children's Place
Applebee's
Gap
Sam's Club
Sears
Abercrombie & Fitch
Chico's
# of announced closings
Source: PNC, Creditntell, JLL Research
Walgreens tops the closure list as it optimizes its store count after Rite Aid store acquisitions

12. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.12Looking at closures over time 2017 saw the greatest number of closures in re cent years; 2018 counts are lower, to date
0
500
1000
1500
2000
2500
# of effective closures
Source: Creditntell, JLL Research
*Effective closures are specified locati ons expected to close at a given date

13. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.13Comparing the numbers: 2018 vs 2017 closures
Source: Creditntell, JLL Research
*Effective closures are specified locati ons expected to close at a given date
Effective* closures so far in 2018 are 41.3% lower than 2017
361
265
208
69
0
100
200
300
400
500
600
2017 2018
# of stores already closed
January
February
Top categories to date in 2017
Category # of stores
Apparel 289
Sporting goods 79
Grocery 59
Toys/Games 47
Department store 25
Top categories to date in 2018
Category # of stores
Wholesale club 63
Discount department store 51
Apparel 51
Department store 35
Grocery 30

14. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.142018 closures on the map
AK
HI
# of stores
closing in 2018
0-10
11-25
26-50
51-75
76-100
Over 100
California tops the states with the most expected closures in 2018 to date
Source: Creditntell, JLL Research

15. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.15Top 10 metros for 2018 closures
Source: Creditntell, JLL Research
Indianapolis tops the list of metros with announced locations closing in 2018
9
8
7
7
7
7
7
7
7
7
Indianapolis
Richmond
New York
Rochester
Columbus
Houston
Burlington
Las Vegas
Chicago
Cincinnati
Locations closing in 2018

16. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.16
Windsor Square
Matthews, NC
Retailer bankruptcies
766
600
379
252234
117
207180
91
123110
66
252016
1
2
75
104
20040
24
9
Closures not due to bankruptcy
Closures due to bankruptcy
Source: PNC, Creditntell, JLL Research
Few closures announced for 2018 are due to bankruptcy

17. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.17
Windsor Square
Matthews, NC
Retailer bankruptcies
Source: PNC, Creditntell, JLL Research
Toys R Us closing the most stores due to bankruptcy
200
100
49
40
26
24
9
4
Toys R Us
Charming Charlie
A'Gaci
Bon-Ton
Calypso St. Barth
Kiko USA
Michael Hill Jeweler
Charlotte Olympia
# of stores closing in 2018

18. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved.18Retailers on the closure radar
Source: Creditntell, JLL Research
The below retailers all have credit ratings below satisfactory. Future closures may be imminent.
Retailer
Credit Intell
Rating
Academy Sports + OutdoorsD1
Fred's
E2
Bravo Brio Restaurant GroupD1
99 Centers Only Stores
F1
DineEquityD1
bebe stores
F1
J.C. Penney CompanyD1AeropostaleF1
Jo-Ann StoresD1
Ignite Restaurant
F1
Restoration HardwareD1
Le Chateau
F1
StaplesD1
Sears Holdings
F1
Tailored BrandsD1Claire’s StoresF2
Christopher & BanksD2American ApparelDIP
Conn'sD2
Bon-Ton Stores
DIP
Lands' EndD2
Gordmans Stores
DIP
Sportsman's Warehouse
Holdings
D2
Gymboree Corp
DIP
BlueStem GroupE1Michigan Sporting GoodsDIP
Destination MaternityE1Wet SealDIP
Hudson's Bay CompanyE1
Aeropostale
DIP
J. Crew GroupE1
American Apparel
DIP
Neiman Marcus GroupE1
Sears Canada
DIP
Rent-a-CenterE1
Toys R Us
DIP
Rite Aid CorpE1
Wet Seal
DIP
Stage StoresE1rue21, incDIP
Stein MartE1
Sports Authority
DIP
Credit Intell Rating Definitions
CI rating
Equivalent
S&P rating
Credit quality
D1 B Below satisfactory
D2 B- Below satisfactory
E1 CCC+/CCC Poor
E2 CC Poor
F1 C Critical
F2 D Critical
DIP - Filed for bankruptcy

19. © 2017 Jones Lang LaSalle IP, In. All rights reserved.
19
James D. Cook Americas Director of Research, Retail
[phone]
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[email protected]
Keisha Virtue Senior Research Analyst, Retail
[phone]
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[email protected]