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"Commercial Real Estate Collapse Heading To
Catastrophic Bankruptcies And Foreclosures"
by Epic Economist
"The commercial real estate collapse has pushed countless retail chains over the edge throughout the past few years, but ever since the health crisis struck, we have seen big retailers that once seemed too big to fail going bankrupt and shutting down their entire operations overnight. Last year, we witnessed the closure of thousands of retail stores all across the country, and the trend is expected to continue in 2021, as several iconic brands already announced they will be closing hundreds of stores just on the first quarter, with many more to come as consumers are increasingly turning to online shopping.
The reopening scheduled to happen later this year will finally allow us to see how the devastating effects of the recession have emptied out our economic landscape, and the gap created by so many closures is putting the existence of shopping malls at risk According to experts, 25% of all U.S. shopping malls are forecasted to disappear until 2022, adding extra pressure to the commercial real estate collapse and possibly contributing to trigger another massive wave of lay-offs. That's what we are going to investigate in this video.
As e-commerce has been significantly rising, brick-and-mortar retail stores were being wiped out by the thousands every year, particularly those belonging to huge retail chains like Sears and J.C. Penney. Before the health crisis exploded in America, the widespread decay of the retail sector had been prompted by a variety of different factors, including market saturation and the shrinking of the middle class, as our living conditions have considerably deteriorated over the last decade.
Sadly, according to newly available data, as numerous retailers have experienced unrecoverable losses, many of our most beloved iconic brands are likely to fall victim to the retail apocalypse in the coming months. The findings outline that the health crisis might have been the final nail in the coffin of several brands that have been struggling in recent years.
Now, the future of these brands remains uncertain, and it is very unlikely they will ever come back to "normal". The rise of Amazon and other online retailers has pushed brick-and-mortar stores to the brink well before we ever imagined America would face a dramatic economic collapse triggered by a global sanitary emergency. But while it’s indisputable that retail stores were facing challenges for a long time, the impacts of the outbreak cannot be understated.
Measures introduced to supposedly control the spread of the virus, including nationwide lockdowns, accelerated the downfall of many of these companies. Some chains decided to close a portion of their stores to avoid further losses, while others faced a much more brutal fate and were forced to shut down completely or file for bankruptcy. In fact, a recent report from Coresight Research warned that things are bound to get worse as approximately 25,000 stores could be closing permanently as a result of the current recession, and at least 15,000 brick-and-mortar stores could disappear by the end of 2021.
The truth is that the retail apocalypse is leading mall operators to face a reckoning. Many Green Street analysts are highlighting that level of disruption experienced recently was expected to occur over five to 10 years instead of taking place over just two. According to Moody's commercial real estate, in 2020, the national retail vacancy rate increased to 10.5% in the fourth quarter, the highest since 2013, while the mall vacancy rate went up from 0.4% to 10.5%, the highest in decades. Right now, there's "trouble brewing" even at upper-tier malls that once seemed invulnerable to the problems of lower-tier ones.
As a matter of fact, the investment banking company Credit Suisse predicted 25% of all malls in America would be closed by 2022. That's why many experts have been worried the domino effect triggered by store closings and bankruptcies will not only worsen the commercial real estate crisis, as it will also decimate hundreds of thousands of jobs over the two coming years. With almost half of all mall-based department stores expected to close in 2021, at least 1,5 million jobs are on the line, which means the scenario won't only be apocalyptic to retailers but to a large chunk of the U.S. workforce. A massive wave of retail and mall-related lay-offs could potentially take place over the course of 2021. And the impacts of it will send us further away from a recovery than ever before. Darker days are still on the horizon as the widespread collapse of America has just begun."
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