Rue21 Closures Could Add 76K SF Of Retail Vacancy To North Texas Market

A glut of vacancy is about to hit Dallas-Fort Worth’s retail market following the shuttering of Rue21.

The teen fashion chain operates more than a dozen storefronts in North Texas. The average DFW store size is 4,700 SF, resulting in a vacancy gain of roughly 76K, according to data from Partners Real Estate.

Nearly 550 storefronts are slated to close nationwide within the next four to six weeks, the company said in a Chapter 11 bankruptcy filing. Executives pointed to the rise in online shopping as the reason for the demise of sales at its brick-and-mortar stores, more than 300 of which are in malls.

“Teen apparel is a tough business and consumer trends in that segment of retail landscape can shift often,” Steve Triolet, senior vice president of research and market forecasting at Partners, said in an email. “Coupled with most of their locations being within malls has been a bit of a double whammy.”

This is the third time Rue21 has filed for bankruptcy protection in 20 years, and the business carries substantial debt, Triolet said. During its second filing, which came in 2017, the company shuttered 400 stores and shaved off about $700M in debt, Reuters reported.

This time around, no buyers were willing to purchase the business for more than what the company would earn through liquidating its inventory. 

Rue21 is the latest in a string of mall-based apparel retailers to declare bankruptcy. Forever21, The Limited, Claire’s and Wet Seal are among the businesses to seek this form of relief amid plummeting sales. 

With space in DFW’s retail market as tight as it is, the Rue21 closures could be viewed as a blessing in disguise. Triolet said there isn’t nearly enough new construction coming online to meet demand.

“Even with a handful of these national chains [closing] … everything points to [retail] being the tightest of commercial real estate types, in terms of vacancy,” Triolet said.

DFW’s overall retail vacancy rate was 4.8% at the close of the first quarter, up 20 basis points from the end of 2023 but flat compared to a year ago, Partners data revealed. There is 5.5M SF of retail space in blocks of 5K SF or more under construction, about 34% of which isn't yet spoken for.