Nothing lasts forever: Farewell Forever 21

While driving to visit family last weekend, I noticed the Forever 21 store entrance at the Galleria at Tyler in Riverside, California. Interestingly, this mall staple was once a popular brand among younger consumers. However, times have changed, with Forever 21 being the latest example of a retailer shutting down operations. Facing challenges such as persisting inflation and heightened competition from rapidly rising foreign fast fashion brands, Forever 21 found it difficult to operate in the current retail environment.

According to Forever 21’s store directoryopens in a new tab, there are 352 stores operating in the U.S., excluding Puerto Rico’s five locations, as of March 26, 2025. Malls will account for 82.4% of store closures, followed by Outlet Center’s 13.4%. Of the remaining stores, only a few are located within urban corridors such as Miami’s Lincoln Road and New York’s Time Square and Penn Station.

California will be the state most impacted by these closures, with nearly 1.5 million square feet to be vacated in the form of 58 store closures, 77.6% of which are in malls. Additionally, the state is home to some of Forever 21’s largest stores, including a 153,500-square foot store at Riverside’s Galleria at Tyler Mall and a 149,835-square foot store at San Bernardino’s Inland Center Mall.

Following California, Texas will see 32 store closures (84.4% in malls), totaling just over 720,000 square feet of retail space, roughly half of California’s impacted square footage. Florida ranks third, with nearly 400,000 square feet to be vacated through 23 store closures (65.2% in malls).

As more retailers close their mall locations, the overall mall category will struggle. For instance, in January 2025, Macy’s announced the list of 66 stores that would close this year as part of its three-year plan to shutter 150 underproductive stores by 2026.

However, the Forever 21 closures will provide opportunities for landlords. Of the upcoming 290 Forever 21 mall store closures, Class A malls account for nearly 47% of the closures compared to Class B malls’ 50%.

There are key differences among mall classes, with Class A malls showing much more robust demand than Class B or C space. Among the mall classes, Class A malls enjoy the lowest vacancies, registering at 5.6% in Q4 2024 - 340 basis points below Class B malls (9.0%) and almost 800 basis points below Class C malls (13.3%).

Mall owners of high-performing malls will likely be able to easily re-lease the space vacated by Forever 21 at a higher rental rate, thanks to the desirability of prime retail space. Regarding the larger Forever 21 stores in lower-performing malls, owners will have to decide between backfilling these spaces with additional retailers or turning to redevelopment, incorporating other uses where appropriate.

Consumer behavior has shifted significantly post-pandemic. The convenience of online shopping has sustained e-commerce growth while the escalated cost for necessities has heightened deal-seeking behavior among consumers.

These shifts in consumer behavior have benefited foreign fast fashion brands such as Shein and Temu, which have grown in popularity due to their low prices, enticing inflation-weary consumers. Also, these brands have leveraged social media platforms like Tik Tok to expand their online presence.

As recent data from the Census Bureau shows e-commerce’s share of total retail sales has returned to its pandemic-high of 16.4% in Q4 2024, it's crucial for retailers to invest in their online channel amidst rising competition. In a constantly evolving retail environment, times keeps moving on – you can’t stay 21 forever.