The recent Chapter 11 bankruptcy reorganization filing of shoe and apparel wholesaler Nine West Holdings Inc. focused the retail spotlight on the outlet center segment of the commercial real estate industry.
Despite the bad news for the U.S. commercial real estate market – including Philly retail space – that Nine West is closing all 70 of its stores, the good news is that leasing demand for outlet store space has been outpacing availabilities.
This report on U.S. and Philadelphia commercial properties is being made through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm focusing on Philly retail properties.
Privately held Nine West’s filing seeks to restructure about $1.6 billion in debt, much of it racked up in the national and Philadelphia commercial real estate markets when private equity firm Sycamore Partners Management acquired the company and affiliated brands in the 2014 for $2.2 billion.
While 80 percent of Nine West’s sales come from wholesale operations, it also operates 70 brick-and-mortar retail stores – all of which it has now closed and is asking the court to cancel the leases on those locations. Sixty-seven of those locations were in outlet centers included among national and Philadelphia commercial real estate properties.
The store closures hit two publicly traded retail landlords and their U.S. and Philadelphia commercial real estate listings the hardest. Simon Property Group will lose 35 stores. Simon owns and operates a portfolio of 91 centers through Simon Premium Outlets and Tanger Factory Outlet Centers will see 19 stores closed out of its portfolio of 44 upscale outlet shopping centers.
The stores typically ranged about 3,000 square feet in size on average, which means about 105,000 square feet of newly vacant space in the U.S. commercial real estate market – including Philly retail space – for Simon and 57,000 square feet for Tanger.
That is a bigger chunk of space comparatively for Tanger. During 2017, Tanger recaptured 201,000 square feet within its portfolio. The 2017 amount is nearly double the amount it took back a year earlier. Overall occupancy declined from 98 percent in 2016 to 97 percent last year.
For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (firstname.lastname@example.org) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.
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