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

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]