Lower-End Concepts Gain Landlord’s Fancy
a number of big box chains closing unproductive
locations and other chains liquidating amid the downturn, landlords
took a new shine to lower-priced formats in 2009.
California, sliding rents and vacancies helped many stores land locations
in the region they couldn’t tap a few years ago, according to an article
in the Los
A study by Rizika found almost 100 empty big-box retail stores in Los
Angeles County, equaling to 4.5 million square feet. Most came from
the liquidations of Circuit City, Mervyns and Linens ‘n Things.
and Staples are introducing smaller stores to enable them to fit into
more affordable urban locations, according to Rizika. At the same time,
bargain women’s clothier Forever 21 moved into some former Mervyns
locations that are larger than its typical stores. Kohl’s as well as
Nordstrom Rack also moved into former Mervyns’ locations.
property expert Michael Wiener told the L.A.
while upscale stores such as Nordstrom are still highly sought by landlords,
the less-pricey Kohl’s, Target and even dollar stores such as 99 Cents
Only are becoming more attractive targets.
discounters have proliferated and will move into more attractive locations,” Mr.
Wiener said. “All of a sudden they are the darlings and can have the
pick of the litter.”
similar reshaping is happening in New York City, where rents have fallen
almost 50 percent on Madison Ave., according to an article in Crain’s
New York. J.C.
Penney opened its first store in the city with a location next to Macy’s
on Herald Square, while Costco opened in Harlem. Nordstrom Rack signed
a lease for a location in Union Square, replacing a Virgin Records
34th Street between Fifth and Seventh avenues, rents declined around
30 percent to near $400 a square foot, brokers told Crain’s.
The more affordable rents helped Aéropostale open its first
street-level store in the city on the block. Esprit and Geox also secured
more affordable leases on the strip.
Wiener predicted that as many as 8,000 locations will close nationwide
as consumer spending remains tepid, retailers slow expansion, and bank
loans come due for property owners.
optimistically, mall landlord Sandy Sigal told the L.A.
while “last year was panic and desperation” for tenants, with some
seeking relief from rent payments, the panic has eased and retailers
have become “more realistic.” He added, “Tenants are getting better
at learning how to survive in this market.”
Questions: How are the low rents and vacancies reshaping the retail
landscape? Which channels (strip mall, regional mall, neighborhood
mall, etc.) will likely see the most reinvention due to current economic
space opens up as big chains shrink – The
Los Angeles Times
brought rent relief for retailers- Crain’s
Real Estate Begins Healing – Retail