On the national scene , The Wall Street Journal, on 9/10/08 , ran the following headline: "Mall Glut to Clog Market for Years."
The news article stated," For the first time since the 1990-91 recession, occupied retail space in major U.S. Markets is expected the decline by 1.2 million square feet."
" Developers have built one billion sf of retail space since the start of 2000, 25% more of what they built during the same period of the 1990's."
On the state wide level, on last Friday, Mattress Discounters, announced bankruptcy and that it will be closing 34 Massachusetts store location. That's bad news for 34 retail property owners, most of them shopping center owners.
The once Top Shelf investor property: "The Shopping Center," appears to be heading towards some rough waters. This class of property is now seeing over supply and under demand.
Many many national and regional retail stores are closing and vacancies everywhere are increasing.
In Massachusetts alone, there are approximately, 25 shopping centers up for sale. Most of the savvy investors and bankers, I have talked with in recent days, indicate that the majority of these centers are simply overpriced when view from the Income Approach to value!
It appears than many of these properties were purchased on pure speculation with an eye toward "flipping them" for instant profits. The flipping days in this class of real estate are over.
We are now seeing the great buyer-seller price disconnect. Shopping center sellers don't want to, or can't reduce prices and the investor buyers are not buying. For now it's the classic real estate "tug-of war," syndrome.
Eventually some side will give in, but with the sad shape of the financial money market, I don't think it will be the investor buers who will blink first.
Bill McInerney
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