Big-box retail landlords make huge rent cuts to attract tenants

New York /
Apr.April 27, 2011 12:53 PM

More than half of the surveyed stores closed by some of the nation’s largest big-box retailers in 2008 and 2009 remain vacant, according to a Colliers international report cited by The Wall Street Journal. The survey examined 233 of the 1,259 stores closed by Circuit City, Linens n’ Things, Mervyn’s and Gottshcalks, and found that replacement tenants in the large retail centers paid 17.9 percent less per month than their closed predecessors. That survey is a microcosm of the big-box retail landscape as a whole, where vacancy rates declined to 7 percent in the first quarter of 2011 — down from the 7.5 percent highs in early 2010 — but only because rent has declined 6.4 percent since the second quarter of 2008, according to a separate report released by Reis. Landlords are struggling to balance the costs associated with signing big retail tenants for substantially smaller rents and those associated with anchor vacancies causing other stores to vacate the outdoor shopping centers. Some companies are taking advantage of the opportunity to rent for less, including Bed Bath & Beyond and Indiapolis-based electronics outlet Hhgregg, which save 10 percent or more on rent by occupying former Circuit City and Linens n’ Things stores. The Real Deal previously reported that Hhgregg is using cheaper rents in South Florida, in particular, to bolster their presence to five stores. The only bright side for the landlords is that with retail construction flailing, there’s less competition for tenants from newer, more appealing centers. [WSJ]


Related Articles

arrow_forward_ios
200 Park Avenue and 1301 Sixth Avenue (Postdlf/Wikimedia, Paramount Group)
Midtown Manhattan doubles office leasing in August as rents slide
Midtown Manhattan doubles office leasing in August as rents slide
Colliers CEO Jay Hennick (Hennick, iStock)
Colliers reports major rebound in revenue
Colliers reports major rebound in revenue
From left: Vornado's Steven Roth with 11 Pennsylvania Plaza and 1540 Broadway (Getty, Jorge Láscar/Flickr, VNO)
Manhattan office rents under pressure with 17% availability
Manhattan office rents under pressure with 17% availability
Manhattan’s office availability rate hit an all-time high in May. (Getty)
Manhattan office availability keeps on climbing
Manhattan office availability keeps on climbing
1540 Broadway and 31 West 52nd Street (Google Maps, Hines)
Manhattan office availability hits record high…again
Manhattan office availability hits record high…again
Colliers International CEO Jay Hennick (Colliers, iStock)
Colliers’ acquisitions help boost company’s Q1 revenue
Colliers’ acquisitions help boost company’s Q1 revenue
345 Park Avenue and 787 Eleventh Avenue (Photos via Google Maps and Rafael Viñoly)
Manhattan office availability hits all-time high in Q1
Manhattan office availability hits all-time high in Q1
New York Times tower at 620 Eighth Avenue and Park Avenue Plaza at 55 East 52nd Street (Photos via Wikipedia Commons, Google Maps)
That empty feeling: Manhattan office availability at record-worst 15.5%
That empty feeling: Manhattan office availability at record-worst 15.5%
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...