21 Jul 2011

Borders

The sudden demise of Borders is another hit the commercial real estate market. The market has been buffeted by a huge influx of inventory from 2006 to 2008 followed by the recession that has put many companies out of business.

The addition of the 6.3 million square feet of space that Borders will now put on the market is going to exasperate an already tough situation. The vacancy rate at community shopping centers is already at 11 percent, just off the all time high, or nearly 860 million square feet of space nationally.

That is a great deal of investment not earning any income.

The Borders bankruptcy is just going to exasperate an already bad situation.

Borders Group Inc.’s proposed liquidation will increase available U.S. retail space by about 6.3 million square feet (585,000 square meters) as the industry struggles with near-record vacancy rates and stagnant rents.

DJM Realty LLC plans to auction 259 Borders leases in two separate sales, likely in August and September, said Andy Graiser, co-president of the Melville, New York-based property- consulting firm. That’s on top of about 225 stores the book retailer began closing after its February bankruptcy.

About 859 million square feet of U.S. store space is empty, according to CoStar Group Inc. Retailers have cut back amid online competition and a national unemployment rate of more than 9 percent. Borders’ liquidation is the latest to add vacancies after more than a dozen national retailers sought bankruptcy protection since the recession in 2008 and 2009. via Bloomberg