Circuit City: Is There ANY Upside?

Some say there could be for other retailers.

A Dow Jones article specifically points to Best Buy as being the big winner, grabbing up to 40% of the liquidating retailer’s sales. Analysts are saying that other retailers, like Costco, Wal-Mart and Staples could stand to gain as well. So does that mean that centers with those stores as anchors will see increased traffic?

Of course, there’s very little upside for landlords with Circuit City as an anchor tenant. According to a Reuters article, REITs with the highest exposure are Developers Diversified Realty (1.7% of its base rent) and Kimco Realty Corp. (1.5%). Of course, those are HUGE companies that have a better chance of absorbing the blow than most.

So what are smaller investors to do that have Circuit City exposure? Hope that Best Buy decides to expand again?

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6 Responses to “Circuit City: Is There ANY Upside?”


  1. 1 Mark M. January 21, 2009 at 9:12 am

    Best Buy might look at a few Circuit City stores, but in a majority of the cases, Best Buy already exists in the market/trading area and has probably outpositioned CC or has a better sited location. Circuit City physical boxes are challenging and will be difficult to break-up for any interested and active middle and small sized retailers. It’s not a typical, clean square box and there are multiple depths. They were built with many custom internal and external building configurations including distinct deep loading docks), “tower feature” entrances with center doors and very few flat, clean storefronts. Best efforts made for most landlords is to press hard to make deals with active discount big boxes (but be aware of very high upfit costs and challenging As-Is deliveries). With all of the other big box surplus available, with easier boxes to breakup and much more to come, considering temporary uses, non-retail uses or slicing off useable space for splitting and mothball excesss/unusable space.

  2. 2 David Wolff - High Point NC January 21, 2009 at 10:06 am

    The amazing liquidation story in this town is that the liquidator took everything off sale and then reduced 90% of the store’s inventory by 10% off “REGULAR” prices, 20% off CD & DVD sales, and 30% off cables and wall mounting brackets. The customers at these low sales prices cleaned out the store instead of purchasing the week before at better sale prices when business was normal.

    People behave irrationally when they see a G.O.B. sale. Their is always a better price elsewhere.

  3. 3 BB Not Helping January 21, 2009 at 4:34 pm

    With Best Buy offering $6psf and requiring $75+psf in TI’s for our dark Circuit City Doesn’t sound to me like Best Buy is going to help any LL out…

  4. 4 Oi! January 21, 2009 at 5:11 pm

    Let’s see- collecting above market rent for the next 2-10 yrs from CC versus finding a replacement tenant in a contracting retail marketplace…? not sure where you think you’re gonna find “upside” anywhere in ’09 especially as related to the CC story.

  5. 5 Dunkin'man January 22, 2009 at 10:00 am

    After watching CC enter many markets in the 90’s and pay MARKET RENTS and overspending capital dollars on retrofiting other failed big boxes, it didn’t suprised me when they laid off their best sales people.

    This was a construction company selling electronics,hoping they could compete with an inferior marketing program. Even to the end their pricing was out of touch with the markets they were in.

    I do feel sorry for the landlords, but if CC wasn’t on the watch list for years, then…

  6. 6 Chris Rodriguez January 22, 2009 at 1:43 pm

    CC was destined to fail. They paid high rent and often took inferior locations. I’m not sure Best Buy is the big winner because I don’t think they are looking at a very stellar next couple of years either.


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