U.S. store closings have surpassed openings for the first time this year, the result of a surge of bankruptcy filings by struggling retailers that has extended into the back half of 2024.

Year to date, the 4,548 stores shutting their doors have outpaced the 4,426 announced openings, resulting in 122 net store closings, according to a Coresight Research report dated Aug. 9. The data marks a shift from the previous two years’ annual totals where openings edged closings.

One of the reasons closings are now outpacing debuts is because furniture and home goods seller Big Lots, based in Columbus, Ohio, has significantly increased the number of locations it plans to shut, by 258, John Harmon, managing director of technology research at Coresight, a data-driven retail analytics firm, told CoStar News on Tuesday.

"Until two weeks ago, the lines [of closings and openings] were just tracking each other as expected," he said.

Around the time of the ICSC national retail real estate conference in May, there had been wave of retail Chapter 11 filings and store closings. In the past few months there's been another spurt of bankruptcy filings, with more vacant retail space being thrown onto the market. But at least one retail analyst said there hasn't been any tipping point now — that despite the new round of closings the demand for retail space will continue to outstrip the supply. The national retail vacancy rate is 4.1%, according to CoStar data, making that sector very tight in terms of available space.

"It's not, in my opinion, a resumption of the retail apocalypse that we saw in 2018, 2019, 2020 where we were seeing so many stores closed," Brandon Svec, national director of U.S. retail analytics for CoStar Group, told CoStar News. "There are still a substantial amount of tenants from a broad range of sectors looking for space. And the longer-term imbalance between the space needed in retail and the space that we have, I don't think has shifted."

Of course, it remains to be seen how many more retailers shake out this year and what effect that will have on retail leasing. Several analysts said they expect more stores to be shuttered and more Chapter 11 filings.

In recent weeks, in addition to Big Lots, the flock of retailers and chains shuttering locations has grown to include Conn's HomePlus, Badcock's Home Furniture & More, LL Flooring Holdings, Buca di Beppo, Rubio's, and World of Beer. The LL Flooring closings, 94 stores, just happened this week so aren't included in Coresight's report.

Coresight said that department store chain J.C. Penney had closed 12 stores year to date. The retailer plans to close three more stores in 2024: one in the Shoppes at Bel Air shopping mall in Mobile, Alabama; one in the Sikes Senter shopping mall in Wichita Falls, Texas; and one in the Elm Plaza shopping mall in Waterville, Maine. J.C. Penney also plans to close one store in the Westfield Annapolis shopping mall in Annapolis, Maryland, at some point in 2025, according to Coresight. It now operates 660 stores.

Discount giant Target plans to close one store in East Palo Alto, California, on Sept. 28, taking the company’s U.S. store count to 1,965, according to Coresight. And Party supplies retailer Party City has opened one store and closed 18 year to date, with plans to close one store in Albany, Georgia, later in this year, according to Coresight's report.

Still, this year's store closings pale compared to prior years. In 2020, the peak of the pandemic, there were only 3,704 openings compared with 9,698 closings, for a net of 5,994 closings, according to Coresight. In 2021, there were only 180 net store closings, with a total of 5,228. In 2022, store openings soared, to 5,394 openings compared with 3,819 closings, for a net 1,575 openings. And last year, there were 5,843 openings versus 5,548 closings, for a net 295 openings.

Barrie Scardina, president of Americas Retail Services, Agency Leasing and Alliances for the brokerage Cushman & Wakefield, in an email said it's important to note that the square footage of the store openings is still ahead of that for closings, citing Coresight data. As of Aug. 2, announced store openings will result in an estimated 79.5 million square feet of new retail space, she said, compared with an estimated 67 million square feet of closed retail space.

Svec and Daniel Gielchinsky, a partner at DGIM Law and a bankruptcy attorney, both said that retailers selling goods relating to homes and home improvements have been hit hard by high inflation and high interest rates that are putting a break on consumer spending in that sector.

On Tuesday, Home Depot, the world's largest home improvement retailer, reported fiscal second-quarter earnings and said it expects full-year, same-store sales to drop 3% to 4% in 2024.

"When people are unable to go out to the market and buy a house or invest in their house, it affects everything else," Gielchinsky told CoStar News. "Studies show that people who spend the most or invest the most in their newly purchased home in the first three years of their home ownership. But if home ownership is out of people's grasps, then they're never going to have that opportunity to invest."

He predicted that smaller home improvement retailers will be filing for Chapter 11.

The rise in store closings is a reflection of retail sector specific weakness, especially related to the slowdown in home sales, according to Svec.

"And it does reflect a true rotation and slowdown in sales growth that we're seeing amongst a lot of retailers," he said.

From an operational side, retailers are feeling the impact of slowing sales growth, higher costs, and fewer accommodating debt markets, according to Svec.

"All of those things are combining to reduce retailer profitability, to lead to this uptick in closures," he said. "But most of the closures we're seeing still can be classified really into a couple buckets. First and foremost, sector-specific weakness due to outside macro factors, and that's really your housing market, your furniture market, your appliance market. All of those sectors are are really still struggling, but that's really nothing to do with the overall macro environment."

Second, companies that were already standing in weak financial positions were thrown a temporary lifeline by the pandemic, according to Svec.

"Once sales normalized, once operations normalize, their poor merchandising, poor location strategies, what have you came back to roost," he said. "And we're now paying the piper that we should have and would have probably paid in 2021 had it not been for those tailwinds that they got from the pandemic."

Some retailers are relocating out of malls, resulting in store closings, he said.

There are plenty of bright spots in terms of store openings, with retailers such as Dollar General, Burlington Stores, and TJX Cos. debuting hundreds of new locations. And in an unusual turn of events, the new owner of teen apparel chain Rue21 that filed for Chapter 11 and closed more than 500 store, is reopening dozens of those shuttered locations.

In its recent report, Coresight cited 30 additional announced store openings were led by: Havertys, seven; Publix, five; Sleep Number’s, four; and Daiso, Murphy USA and Rag & Bone, three each. In addition, luxury retailer Gucci opened up shop at the American Dream megamall in East Rutherford, New Jersey.

"We have too much retail space in certain locations," Svec said. "We have too much space in certain formats. But overall, I think we are still in a very tight space-balance position across most of the sector. And that's not changed by these more recent store closure announcements."