Retail Real Estate Market

Like it or not the retail real estate market is not doing well.

Since 2006 " it been a rough ride for retail" per the Commercial Investment magazine.

However many retail shopping center owners in MA are still attempting to peddle properties at 2001 prices! I'm of the opinion that rather soon we are going to see increasing vacancies! These will include both nationals and local's.

In Massachusetts, Bankers and Tradesmen's Commercial Real Estate edition of 2-25-08, has a great article by Jonathan Martin (of Colliers Meridith & Grew of Boston), entitled " Retail Retrenchment."

To quote" The almighty consumer has been pushing retail to new heights over the past decade. New concepts and stores opened and expanded at rapid pace, even at the expense of diluting the brand and quality of product & service. Both venture capital firms & Wall Street are significant contributors to this excessive over expansion!"

When it comes to retail he states " Who's stocks are plummeting? Who's filing for bankruptcy? Whose closing stores? Energy and commodity prices, consumer spending; the value of the dollar have all taken their toll on the retail sector."

We have seen Starbucks closing 600 stores; Wilson Leather has closed most stores, The Sharper Image is gone into Bankruptcy . Ann Taylor is hanging by a thread and Foot Locker, Children's Place, Pier 1 Imports, The Gap have all announced many retail store closings or down sizing. To these add Circuit City and Linens "n" Things. The list is nasty.

Big chains like Steve & Barry's leased 3.5 million square feet of shopping centers in the US & here in MA. They have defaulted on loans to GE Capital & filed for Bankruptcy.

The retail woes include such restaurant firms as Bennigan's which shut down all of it company owned units. Olive Gardens and Red Lobster, per Wall Street Journal of 8-27-08, are also struggling. They state" "In coming months, restaurants are expected to close more locations, build fewer new ones, offer more low priced promotions, and tighten worker schedules to contains labor costs."

Another headline in WSJ today states, " Shoppers Shun Malls for Big Discounters!

Where is this negative trend going? What does this mean for retail shopping centers centers?

More to follow.

Bill McInerney