James Briggs, USA Today Network
INDIANAPOLIS — That HHGregg store near you might never be filled again — at least, not by a retailer.
Indianapolis appliances and electronics seller HHGregg Inc. is in the process of closing all of its stores. While some of the openings are in prime locations that will attract interest, all of them face uncertain futures.
HHGregg's (HGGGQ) liquidation comes amid what analysts have dubbed the "retail apocalypse," the worst period of retail bankruptcies and closings since at least the Great Recession. As the second quarter begins, retailers already have announced plans to close more than 3,000 stores this year — so many, in fact, that HHGregg's 220 closings only rank fifth-most in the U.S., according to a list compiled by Business Insider. RadioShack, Payless ShoeScource, The Limited and Family Christian Stores top the list.
"We're over-retailed," said Mark Millman, CEO of retail consultancy Millman Search Group. "Retailers are just downsizing to consolidate and make themselves profitable."
For HHGregg, what began as a consolidation — the company in March announced it would close 88 underperforming stores — quickly spiraled into bankruptcy and liquidation. Even before HHGregg officially collapsed, landlords began preparing to fill vacancies created by the 62-year-old company's failure.
"We were anticipating, if this were to happen, what direction we might go with the marketing of the properties," said Larry Davis, a first vice president for CBRE Group Inc.
CBRE manages two Indianapolis area locations. Davis expressed confidence that HHGregg stores would find new tenants.
Having prime real estate is one thing. Finding a retail tenant is another. At a time when inventory is shifting from brick-and-mortar stores into warehouses managed by e-commerce leaders such as Amazon.com Inc., there's no guarantee that even a big-box store in a good location will attract another retail chain.
Davis acknowledged that it could take new uses to fill at least some HHGregg sites.
"We're seeing adaptive reuse; things like entertainment are becoming bigger consumers of retail space all the time," Davis said. "Use of retail facilities by medical practitioners and providers is also a trend we're seeing."
In other cases, he said, grocery stores have filled properties vacated by non-grocery retailers.
Simon Property Group Inc. increasingly has used entertainment to fill undesirable retail spaces. For instance, the company filled part of the former Nordstrom space in Indianapolis' Circle Centre Mall with Punch Bowl Social, which includes dining, bowling and other games. The mall also has a black-lit mini-golf course called GlowGolf.
In the Chicago area, some retail locations have become recreation and entertainment businesses, such as rock climbing gyms and trampoline parks.
Jacque Haynes, a senior vice president for Cushman & Wakefield, said she would expect an HHGregg location in high-demand areas to be on the market between six and 12 months.
Related: HHGregg files for Chapter 11 bankruptcy, finds buyer
HHGregg's stores typically are between 25,000 and 30,000 square feet. While the prospects for finding retail tenants to fill those spaces in the near future might be dim, it's not entirely out of the question.
The retail landscape will become clearer when the International Council of Shopping Centers hosts its RECon conference May 21-24 in Las Vegas. The annual event brings together retail executives, real estate brokers and government officials.
If Davis is lucky, he could return with a tenant or two lined up for HHGregg spaces.
"From a timing perspective, this is the big dance of the year with national retailers and retail users, brokers and developers," Davis said. "I guess, if there is good timing, this would be about as good as it gets because we'll be with the likely candidates."
Jason Briggs is a reporter at The Indianapolis Star