Retail Tenant Vacancies

[Reese Shulman]

Rubio's Mexican Grill just closed 48 California locations, which was ~35% of all their locations at that time. The company stated, "The closings were brought about by the rising cost of doing business in California." The rising cost of business is likely a combination of the following...

1). The increasing of the minimum wage from $16 to $20 per hour.

2). Consumers cutting back on spending due to high inflation.

3). Loss of foot traffic from Hybrid Work and California's decreasing population in certain areas.

These rising costs are not unique to Rubio's Restaurant nor any other type of retail business. If more retailers vacate their space than those properties are at risk of losing tremendous value as it will be difficult to re-lease to a tenant that is not impacted by California's high costs to do business.