The retail space in the United States has evidently grown in 2018. However, the reason is not development of new properties and infrastructure but a reduction in the number of stores or liquidation by companies with huge floor plans in malls. Retail space vacated in 2018 is expected to surpass the 2017 record.

Despite this shortcoming, all is definitely not lost for these malls as the space once occupied by retail stores is now being replaced with coworking offices. Mall owners are looking for options to counter rising space concerns and thus focusing on unconventional occupants. This shift is projected to boost the coworking space in the retail market.

Retail Space Demand Lowest in Six Years

Retail space going vacant has increased in 2018, per a report by CoStar Group, a commercial real estate information and analytics firm. CoStar’s First-Quarter 2018 State of the U.S. Retail Market report states that demand for retail space in the United States in the quarter was 11 million square feet (MSF) — its lowest in six years.

Retailers are looking to trim their number of stores and even opting for liquidation. Following this, retail store closures as of May 2018 totaled 95 MSF, only 10 MSF short of the entire 2017 mark. Decline in demand of store space can also be attributed to bankruptcies and closures of big players like Toys R Us and Kmart.

In this context, senior managing consultant for CoStar Portfolio Strategy, Ryan McCullough said that the “national retail vacancy rate” has started to contract, with the recovery slowing down. CoStar’s Director of Research Suzanne Mulvee said that “additional pressure from…