Bankrupt Retailers Flooding Georgia Shopping Centers With Empty Space

Bankruptcy has become an epidemic among big-box retailers, loosening up what has been a historically tight retail market.

With Big Lots, Party City and Joann all liquidating their stores, landlords find themselves awash in empty anchor spaces at a precarious moment for the economy.

The supply of available anchor boxes across Georgia — spaces that span 20K SF or more — jumped 57% between 2023 and 2024, from 4.3M SF to 6.8M SF, according to a recent CBRE report.

Those spaces are staying empty longer. It look landlords an average of 25 months to backfill an anchor space last year, up from 21 months in 2023, a 19% jump, according to CBRE. Asking rents and rent compensation dipped as a result. 

The run-up in vacancy last year is far from over. The data doesn't take into account closures announced in the past three months, such as Joann, which announced its sudden closure in February. The craft and fabric seller's liquidation alone is expected to add 1M SF of vacant space to the market in Georgia, according to CBRE. 

Nationwide, retailers are projected to shutter 15,000 stores across the U.S. this year, up from 7,325 last year, according to retail data and advisory firm Coresight Research. 

Retailers are also growing more cautious about opening new stores as the economy faces uncertainty with tariffs and U.S. consumers pulling back on spending, said Leo Wiener, president of Ackerman & Co.'s retail group.

“What happens when the consumer finally says, ‘I’m out of money’?” Wiener said. “It’s a little too early to take one or two data points and make a statement like that, but it feels like a softening is coming, whether we want it or not.”

The rash of retail bankruptcies — which also includes Forever 21, Bargain Hunt, 99 Cents Only and Rite Aid — has many landlords and bond investors sweating. More than $8.7B of CMBS loans are backed by properties where bankrupt retailers have decided to terminate their leases over the past year, Bisnow previously reported. That number is also expected to grow.

“I’m definitely seeing a lot of people with a lot of space,” said Laura King, a retail broker and founder of Alcove Commercial. “I’m talking to a lot of developers who are looking to get creative on what to do with them.”

King said at one center she leases, she fought to keep two anchor tenants from moving to another property when their leases were up for renewal. She convinced them to stay, but she feared there would be a cascade effect had they closed.

“If we would have lost those two, we would have lost all our restaurants,” she said. “When those guys go dark, it is just so hard to fill.”

CBRE Senior Vice President Joe Parrott said the rise in available anchor space has been impacting owners of Class-B and C shopping centers. Class-B properties are anchored by regional retailers or national chains that aren't category leaders, while Class-C centers are those with low-quality locations and leased primarily to local tenants.

The deluge in available spaces means landlords of Class-B and C properties are going to have to become more aggressive on rates, not only to lure tenants willing to consider lesser retail centers to expand into but also to compete with each other, Parrott said. 

Asking rents among Georgia anchor spaces dropped by 2.8% between 2023 and 2024, while rental compensation dropped by about 4%, according to CBRE. 

“The people with the best properties still feel it’s a strong market, it’s a landlord’s market,” Parrott said. “But once you get beyond the Class-A space, it’s a different story.”

Dart Retail Advisors partner Megann Poe said she is telling landlords stuck with big boxes to divide those spaces into smaller stores to court a larger pool of potential tenants.

“There's a lot more tenants in the junior boxes these days,” Poe said. “You're going to create a lot more opportunity for yourself.”

Fitness chains and apparel retailers have been the most active in leasing emptied store space in the past year, according to CBRE. Fitness retailers like Planet Fitness and Crunch Fitness made up 20% of anchor leasing activity in Georgia last year. Apparel retailers made up 16% and home decor and furniture retailers another 14%.

Skyline Seven Real Estate President Ryan Holzer said there is still tenant demand for big-box retail, but the bankruptcy process is complicating landlords’ ability to strike new deals. 

Holzer said he was marketing several former Big Lots stores in Georgia when North Carolina-based Variety Wholesalers agreed to buy up to 400 of the shuttering locations. That put many of Skyline Seven’s managed locations in a gray area.

“We’re working with them in multiple locations. There are some we thought off the bat were closing following bankruptcy, and now some of them will stay open,” he said. “Because of the uncertainty, there’s all this back-and-forth. This ultimately delays the lease-up of that box.”

Two years ago, many landlords were happy to get back space from ailing retailers. It would allow them to fill the spaces with healthier operators paying more in rent, especially as so little new supply was being built, experts said at the time.

Now, Wiener said landlords are willing to accept lower rent in exchange for creditworthy retailers to ensure spaces don’t remain dark for too long, especially since the economic outlook could quickly sour.

“If you want to do the deal, you have to buy the credit,” Wiener said. “I would take a T.J. Maxx or Marshalls deal … not get as much rent and take the credit and call it a day.”