Movie Gallery Could Close 1,800 Stores

Movie Gallery might file bankruptcy this week and could end up as one of the first big chains to close massive amount of stores. According to the Wall Street Journal, the Hollywood Video parent could close two thirds of its units, or 1,800 locations.

This move comes as Blockbuster is in plans to close 1,000 stores of its own and reported poor holiday sales. Obviously, the physical movie-rental business is not the best enterprise to be in right now

The two of these retailers are candidates to put a lot of space on the market in the coming year. But one would hope landlords are prepared to deal with this issue and saw these closures coming.

Are there enough concepts out there expanding to soak up these relatively small spaces, many in good locations? Or will we see these stores stay vacant for a long time?

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6 Responses to “Movie Gallery Could Close 1,800 Stores”


  1. 1 Michael Romelotti February 1, 2010 at 11:05 am

    The business model for Movie Gallery, early on, was to locate primarily in secondary and tertiary rural markets, many of which were developed by “Preferred Developers” with complimentary co-tenants, and where there was very little competition from the likes of Blockbuster. In fact, the motivation for them acquring Hollywood Video was to provide a footprint in top tier,densely populated markets. Given the locations, I believe that it will be somewhat challenging to identify commensurate users that will want to locate in less dense markets when Blockbuster locations are available in more desirable DMSA’S.

  2. 2 Dunkin'man February 1, 2010 at 12:54 pm

    and in today’s environment, who will match the ground lease rents that are under some of the Hollywoood stores. The landowners are in for a shock as well….and will be a while before the succomb to reality.

    • 3 Heather February 6, 2010 at 10:54 am

      Coming from upper management in Movie Gallery/Hollywood video, many of these leases had tried to be re-negotiated. Most of these landlords were unwilling to lower the monthly rent. I am not sure that they were aware of the potential of sitting on their property while it makes no money at all.

      • 4 James February 8, 2010 at 10:19 am

        Were the Landlords resisting leaae modification because of the proposed rates or did they lack confidence in the tenant’s business model?

      • 5 Michael Romelotti March 5, 2010 at 2:57 pm

        Heather,

        What are you now doing with your self?

  3. 6 James February 1, 2010 at 5:46 pm

    These stores will be empty for a long time. Prominent highly visible locations may soon become the poster child for retail expansion excess. I am finding empty pad sites out there with very high CAM charges because they are located in special assessement areas. Property tax charges exceeding $9 and $10 PSF render these locations very non-competitive. The Cities and Counties will have to find ways to defer or rollback these high property tax charges or these sites will remain a blight for years to come.


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