Limited closures open leasing opportunities
Publish Date: January 11, 2017
Topics: the limited
The closure of fashion retailer and mall-staple The Limited is neither a surprise nor a blow to many landlords, who are eager to lease the retailer’s spaces to more productive tenants. The Limited announced this past weekend it was closing all 250 of its physical stores in early January, the result of years of lagging financial performance.
“The Limited, not unlike other apparel retailers, has been caught up in the retail vortex of shifting consumer spending channels and patterns as well as its own merchandising missteps,” said Ken Perkins, president of Retail Metrics. “This presents opportunities to also think out of the box and bring in services that may generate more recurring foot traffic or new, growing fast fashion retailers.”
Founded in 1963 in Columbus, Ohio, by retail visionary Leslie H. Wexner, The Limited was a pioneer in mall-based specialty retailing. It opened its 100th store in 1976 and grew to 772 stores by 1990. In 2007 Wexner sold a 75 percent stake in the chain to Sun Capital Partners and it entered a slow but steady decline.
But where there is pain there is also potential gain, as mall landlords find opportunities to re-lease their former Limited spaces. Other potential turnaround factors are at play as well. “How the market and asset reacts to a store closing is based on location and other tenants within the center,” said Greg Maloney, CEO of Americas retail at JLL. He also points to a national retail vacancy rate that has dropped to 5.1 percent, a full percent lower than it was before the recession.
Many analysts believe that The Limited’s closures will have less of a negative impact on mall owners than other recent announcements. “As the chain struggled over the past few years they already had closed most of their weakest locations,” said Garrick Brown, vice president or retail research of the Americas at Cushman & Wakefield. “What remains, for the most part, are solid Class A and B+ sites and most of these malls aren’t having problems backfilling space.”