Nationally, Store Closings Could Double in 2009

Nov 5, 2008

By Elaine Misonzhnik – Retail Traffic

Circuit City’s announcement Monday that it was closing 155 stores, or 21 percent of its 721 U.S. locations, and planning to start lease renegotiations for others, will be echoed by numerous retailers throughout 2009, with the total number of stores shuttered in the United States expected to double the figure predicted for this year.

By the end of 2008, store closing announcements will total 6,100, according to an October forecast from ICSC. But that figure might reach 14,000 next year, according to industry insiders. Store closings are already projected to be up 25 percent in 2008 compared to 2007, according to TNS Retail Forward, a Columbus, Ohio-based retail consulting firm.

“My personal feeling is that we have not seen the worst of it,” says Matthew Bordwin, managing director and national co-head of the real estate services team in the Melville, N.Y. office of KPMG Corporate Finance LLC, a middle-market investment bank.

Landlords should brace themselves for tough times ahead, after already watching one tenant after another close stores, file for bankruptcy or announce liquidation. Now, even healthy retailers are getting rid of the bottom 10 percent to 15 percent of their real estate portfolios, says Andy Graiser, co-president of DJM Realty, LLC, a Melville, N.Y.-based real estate consulting and advisory firm. To keep vacancy rates in check, landlords will have to do everything in their power to help struggling chains survive when they themselves are being faced with a refinancing crisis.


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