An auction on the leases of 154 closing Circuit City stores that was scheduled for today is canceled due to a lack of bidders, says a Reuters report.
According to a Circuit City spokesperson, the electronics chain might be able to reject the leases by the end of the month, due to the lack of offers.
We guess this isn’t surprise to anyone. Who is out there expanding?
Earlier this week, we spoke with Ivan Friedman, the CEO RCS Real Estate Advisors, which is handling the Steve & Barry’s leases. The interview will be posted as a Q&A next week on GlobeSt.com, but we doubt we’re giving much away by telling you that his outlook on the industry is far from upbeat.
Counter Culture 
Not surprising. Anybody buying a lease at auction now is going to see the “value” of it sink (almost like when you drive a new car off a car-lot, it depreciates the minute it leaves the dealership).
Steve & Barry’s heightens the gloom further — each one of their stores is like one of Howard Hughes’ airplane hangers — who or what kind of firm can “step” into that footprint?
Even if sub-division of the S&B space is offered, who will take the space?
This issue may be the same for other big box users going out of business as there are NO new concepts around the corner ready to fill these large spaces and few, if any, current retailers with rapid growth plans. My guess is that many of these spaces will be adaptively redeveloped into smaller in-line retail spaces, office, medical and even residential uses. In the long run with Transit Oriented Development(TOD)around tansportaion centers and Mixed Use/Town Center Development all the rage, mixing of uses of larger vacnt retail boxes creates a unique opportunity and makes sense.
This is an opportunity through re-development to “redsign” the relationship between public transportation and where we live, eat and shop,creating new TOD’s so when four dollar a gallon gas comes back, and it will, we are better prepared to deal with the economic implications well into the future.
I say Scrape em’. For job security I am going into the big box demo business. These big footprints are useless for almost everything except in a few very unique circumstances. Please Gag and Handcuff me if anyone suggests they can be turned into mini Malls!
Mass transit and Town Center development will never proliferate fast enough or far enough to engulf these stores in adaptive reuse.
Flea market space anyone??
Circuit City buildings will be difficult to remodel for this generation of big space users. A large portion of the “retail” space is a warehouse area tucked behind check out counters. Checking out of a Circuit City Store took a long time. Some stores have dock high truck docks next to the store entrance. In the last century Best Products and H.J. Wilson walked similar floor plans. How quickly we forget the mistakes of the past. Reloading new 2009 Tenants will be an expensive experience that Circuit City Landlords will not soon forget.
I have sometimes mulled whether unwanted excessive suburban sprawl will be redeveloped into apartments (like the last century’s mansions were in central cities) but Stuart’s idea of housing in big box stores is kind of intriguing…and creepy. I’m not sure it will pencil out. Those mansions were in good locations and were built pretty well. Big box stores are the opposite, and I think that greenfield would probably be cheaper. This is not to say that we shouldn’t do it anyway to save resources; just the first objection that pops to mind. Thanks for thinking outside the box.
Anyone still think the hedge fund manager who controls Sears/K-Mart and can always “monetize the unrealized value” in their real estate is a genius? There will be little or no interest in that real estate once the wall street magicians get done destroying those formerly viable retailers. Do us a favor Wall Street and leave CRE alone.
I have been in retail leasing for 30 years. The sale of leases business was successful when the leases being sold we way below market rents as with Woolworth’s. Also when the leases were in markets that were difficult to enter (Crazy Eddie).
These Circuit City leases are close to or above current market rents. The buyer would have to pay rent from day 1 for an “as is deal”. They may have additional “cure” costs and face possible landlord litigation and face an adverse relationship with the landlord.
It was predictable the landlords would get those leases back for free. They have no asset value to the retailer’s bankruptcy estate. If anyone wants these spaces they can get a better deal from the landlord. Today plenty of free rent among other things is on the table.
If the landlords are leveraged and these leases are a large part of the property’s income stream it can precipitate a mortgage default.
Circuit City, Linens and Things, and similar failures will wreck the shopping center industry. What is happening to the furniture stores and auto dealership properties? Also huge store closings are scheduled in the clothing business. First there will be store closings and later retail bankruptcies to reject leases and restructure balance sheets.
1) reserve them for victims of natural disasters, store cots, food, water and porta johns in them.
2) use the signage space to advertize Coke ,Pepsi or what have you, get creative.
3) Heli-pads on the roofs. That’ll work!
4) or, Use these spaces to:
a) Issue military style automatic weapons and an ammunition supply free of charge to every family in America regardless of Race, color or creed.
b) Provide organized mandatory training in the handling and safety of these weapons for every citizen above the age of 12..
c) Sponsor and encourage marksmanship standards and skill contests thru Sniper level throughout the United States, establish graded ranks and awards for each level.
d) Grant gun carry privileges based on a person’s status above. Those qualified could carry weapons at all times anywhere they go even on airplanes..
e) Periodically update weapons and techniques as new technology develops.
f) Ask el-quada if they still want to screw with us.
James,
Your comments para – military comments are offensive.
James, I’m sorry to say, is probabbly closer to reality with the exception of his para military poins.
Anyone who has been around retailers for any length of time can give you the list of the “Top Twenty-Five” retailers to go dark after Christmas. It’s scary to see that some can’t even make it thru the Holiday’s.
And really, what IS the deal with Sear’s and Sear’s Essentials?
There is some good real estate there, occupied by a horrible concept, and managed by an even worse team. Real Estate managed by the brain trust of two dead retailers.
HoHOHO!!!
offensive and really bizarre.
I think James is Counter Culture’s version of Ted Nugent!
Happy Holidays to everyone, and please play nice.
Very bizarre and very strange comments, but offensive????
Life must be very difficult to live with sensitivities that are that refined.
From a buyers’ perspective this group of CCS leases is certainly not the pick of the litter in terms of economics, location and other lease terms. Re-leasing or adaptive re-use will be much more challenging than for hard to find, urban infill locations (a la LA, NYC, Chicago, etc.). Greenfield may be the way to go depending upon the age of the building/lease.
Happy Holidays
That was all meant to be tongue in cheek folks,a parody on our times. I am streching far and wide for potential uses, these spaces are going to be the new wasteland of America.
Ted Nugent has “none of the virtures I respect and none of the vices I admire”
Sorry about the Nugent reference James!
We’re all stretching far and wide these days…
James,
The scary thing is, I understand your tongue in cheek reference. I toured a vacant Circuit City for an owner yesterday in a very bad part of town and came across a copper theif. Fortunately, he fled with no shots fired. The problem is breaking the news to the owner that the value of his “asset” has depreciated substantially.
How about adaptive reuse as indoor growing facilities for our new bio-fuels industry…