After several years of post-pandemic recalibration, retail real estate has entered a more selective phase. While many segments of brick-and-mortar retail remain resilient, recent bankruptcy filings, strategic store closures, and measured expansion plans underscore an important distinction: not all physical retail formats are proving sustainable.
Industry data heading into 2026 points less to a broad retail downturn and more to targeted retrenchment alongside disciplined growth. Nationally, store closures are expected to moderate from prior peaks, while new openings are increasingly concentrated among value-oriented and necessity-based retailers. For commercial real estate, the story is no longer about retail survival, but about which formats are expanding, which are contracting, and where space is being returned to the market.
Bankruptcy-Driven Closures Reemerge in Select Retail Formats
Retail bankruptcies have returned to the conversation in early 2026, particularly among off-price, outlet-oriented, and discretionary apparel formats. As part of restructuring efforts, a significant number of physical locations tied to Saks Off 5th have been slated for closure, removing dozens of stores from outlet centers and secondary retail corridors nationwide.
These closures tend to concentrate in assets already facing leasing friction, including outlet centers reliant on apparel tenants and malls with limited tenant diversification. In many cases, bankruptcy has accelerated store exits that were already likely based on declining sales productivity and rising occupancy costs.
Amazon’s Physical Store Reset Highlights Format Risk
Not all store closures stem from financial distress. Amazon has announced the closure of its remaining Amazon Fresh and Amazon Go locations as it refocuses its physical retail strategy around Whole Foods Market.
Despite modern buildouts and strong site selection, both experimental formats struggled to consistently meet performance expectations, particularly in high-cost urban and infill markets. Many of these stores occupied well-located neighborhood retail and mixed-use properties, making their closures especially relevant for landlords evaluating re-tenanting strategies and future-proofing space.
Drugstore Networks Continue to Right-Size
Another meaningful source of physical retail contraction comes from the drugstore sector. Walgreens has announced plans to close a sizable number of U.S. locations over the next several years as it optimizes its store network, targeting underperforming sites and overlapping trade areas.
Because drugstores often function as mini-anchors within neighborhood and community shopping centers, these closures can have outsized property-level impacts, influencing co-tenancy, traffic patterns, and redevelopment decisions.
Expansion Is Concentrated, Not Universal
Importantly, closures are not occurring in isolation. Heading into 2026, national data indicates that store openings are expected to outpace closures in several necessity-driven categories, signaling stabilization rather than retreat. Expansion plans are being led by value and essential retailers such as Dollar General and Aldi, which continue to add locations in both rural and secondary markets.
Conversely, much of the announced contraction is being driven by legacy and discretionary formats, including GameStop, underscoring a widening gap between growth-oriented retail concepts and those facing structural headwinds.
What This Means for CRE
Taken together, these developments reinforce a central theme in today’s retail market: physical retail is not disappearing, but it is being refined. Store formats that lack differentiation, operational efficiency, or alignment with consumer behavior are being scaled back, even when backed by recognizable brands.
For CRE owners and investors, the focus moving forward is less about avoiding retail exposure and more about identifying format-level risk and opportunity. Retail fundamentals remain strongest where necessity-based uses, service-oriented tenants, and value-driven concepts dominate. Meanwhile, outlet apparel, experimental formats, and legacy footprints continue to face pressure, creating both near-term vacancy challenges and long-term repositioning opportunities across shopping centers, outlet properties, and mixed-use developments.
