The unprecedented implosion of U.S. commercial real estate during the coronavirus pandemic is likely to get worse as newly delinquent CMBS loans are surging as the list of retail store closures continues to rise.
Trepp's June CMBS remittance report showed CMBS delinquencies hit a high of 10.32%, not seen since 2012. It was noted that that retail CRE loans were in rough shape.
Many retail shops are heavily indebted, some have already declared bankruptcy, while others are quickly shrinking their operating size, by reducing store footprint to rein in cost as the virus-induced recession, blended with a plunge in consumption, along with a shift to online, is resulting in a rapid acceleration of the retail apocalypse.
Coresight Research's latest forecast has upwards of 25,000 retail stores could close by year end.
Forbes has released an updated list of confirmed store closures. So far, it looks like 8,708 store units have or will shutter operations this year, and could quickly surpass 2019 totals of 9,302, in a matter of months.
Forbes' Store Closure List In 2020
Chuck E Cheese: 54 U.S. stores (bankruptcy)
Destination Maternity: 90 stores (bankruptcy)
GNC: 1,200 stores (bankruptcy)
J. Crew: 54 stores (bankruptcy)
JCPenney JCP: 154 stores (bankruptcy)
K-Mart: 45 stores (bankruptcy)
Modell's Sporting Goods: 153 stores (bankruptcy)
Neiman Marcus (Last Call): 20 stores (bankruptcy)
Papyrus: 254 stores (bankruptcy)
Pier 1 Imports PIR: 936 stores (bankruptcy)
Sears: 51 stores (bankruptcy)
Signet Jewelers SIG: 232 stores
Stage Stores: 738 stores (liquidating)
Tuesday Morning: 230 stores (bankruptcy)
AC Moore: 145 stores
Art Van Furniture: 190 stores
AT&T: 250 stores
Bath & Body Works: 50 stores
Bed Bath & Beyond: 44 stores
Bloomingdale's: 1 store
Bose: 11 stores
Chico: 100 stores (estimated)
Children's Place: 200 stores
Christopher Banks: 30-40 stores
CVS Pharmacy: 22 stores
Earth Fare: 50 stores
Express: 66 stories
Forever 21: 15 stores (estimated)
GameStop GME: 320 stores
Gap: 230 stores
Guess: 100 stores
Hallmark: 16 stores
Lord & Taylor: 30 or 40 stores
Lowe's Canada: 34 stores
Lucky Market: 32 stores
Macy's M: 125 stores (over 3 years)
Microsoft: 77 stores
New York & Co: 27 stores
Nordstrom: 16 stores
Office Depot: 90 stores
Olympia Sports: 76 stores
Party City: 21 stores
Starbucks SBUX: 400 stores (over 18 months)
Victoria's Secret: 250 stores
Walgreen: 100 stores (estimated)
Walmart: 2 stores
Wilson Leather & G.H. Bass: 199 stores
Zara: 1,000 stores worldwide (over 2 years)
With thousands of retail stores closing and the economy contracting, the next conversation Wall Street will have is about deep economic scarring and permanent job loss.
Already, 3 million jobs have been eliminated from the economy, some of which have come from the closure of retail stores. The bad news about permanent job loss is that it's a consumption killer, resulting in less spending at retailers, suggesting an even greater amount of store closures beyond anyone's wild guess could be seen over the next 12-24 months.
This all suggests there's no V-shaped recovery this year - one might want to hunker down for a prolonged downturn, as explained here.