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Store Closings Could Double in 2009
Retail Traffic ^ | Nov 5, 2008 | Elaine Misonzhnik

Posted on 11/05/2008 8:40:20 PM PST by Lorianne

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.

As a result of massive store closings, vacancy rates will spike next year, reaching 17.3 percent by the middle of 2009, according to Property & Portfolio Research, Inc., (PPR) a Boston-based property research and portfolio strategy firm. The firm bases its vacancy projections by comparing the changes in retail space and retail sales against a pre-determined benchmark of required sales per square foot in 54 U.S. markets. The figure includes information on neighborhood shopping centers, community centers, power centers, regional malls and lifestyle centers larger than 30,000 square feet.

In 2009, PPR projects rents in the retail sector will decline 5.6 percent. The most viable option for landlords will be to try to hold on to existing tenants by reworking their lease terms, says Graiser.

With the precipitous decline in consumer spending and the tightening credit, the industry should see a minimum of 10,000 store closings in 2009, says Howard Davidowitz, chairman of Davidowitz & Associates, Inc., a New York City-based retail consulting and investment banking firm. In the first half of next year, ICSC projects, store closing announcements will surpass the 3,100 mark.

With holiday same-store sales growth forecasted to reach, at best, very low single digits, Davidowitz and Lois Huff, senior vice president with TNS Retail Forward, both say there will be a significant number of bankruptcies in the first quarter of 2009. Those chains that are teetering on the edge right now and need strong holiday sales numbers to stay afloat will likely be pushed into bankruptcy.

During the 2008 holiday season, spending on apparel will experience zero percent growth compared with a 1.9 percent increase last year, according to TNS Retail Forward’s projections, while spending on furniture items will fall 2.3 percent compared to a decline of 0.7 percent last year. The luxury sector will feel the pinch as well, though not to the same extent as midmarket retailers, says Davidowitz.

“It’s basically a foregone conclusion that it will be one of the more challenging seasons we’ve seen in many, many years,” says Al Williams, principal with Excess Space Retail Services, Inc., a Huntington Beach, Calif.-based real estate disposition and restructuring firm. “Consumer spending has been down; if anything, by December, it could be slightly worse.”

Excess Space estimates the number of store closings for all of 2009 could increase 100 percent compared to this year, ranging from 12,000 to 14,000 stores. Chains that rely on discretionary spending, including apparel sellers, furniture stores, jewelers and restaurant operators, will be hardest hit, according to Graiser.

This will be a particular concern for owners of class-B properties in secondary markets, which will experience the brunt of the closings, says Bernard J. Haddigan, managing director of the national retail group with Marcus & Millichap Real Estate Investment Services, an Encino, Calif.-based brokerage firm. If those centers face debt maturities next year, the owners might be forced to put in more equity into refinancing transactions to make up for rent shortfalls.

But lenders will likely try their best to help owners keep occupancy levels up, says Graiser. “The lenders are not going to want to see these properties come back to them.”


TOPICS: Business/Economy
KEYWORDS: circuitcity; economy; pennystock; retail
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To: jerry639

We’re buying until Jan 20th....


21 posted on 11/05/2008 9:14:51 PM PST by goodnesswins (CONSERVATIVES....saving America's A** whether you like it or not!)
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To: VOA
But given the difference in shopping experiences at Best Buy and Circuit City in West Los Angeles (just south of UCLA)... I’d say at least THAT Circuit City deserved to be closed down.

Just a bunch of jumpy, in-you-face, won’t-take-no-for-an-answer on “protection packages” bunch of jerks. (but got to admit, they were probably being managed by an even bigger jerk).

Same customer non-service in Pennsylania. The store employees either ignore you or act as though you are a nuisance.

Time to winnow the grain.

22 posted on 11/05/2008 9:21:55 PM PST by lightman (Dies Irae, dies illa)
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To: Lorianne
I expect a much bigger contraction of spending followed by appropriate layoffs of unnecessary employees. When disposable income is taxed away, goods stay on the shelf. Stores close. Unemployment rises.
23 posted on 11/05/2008 9:26:48 PM PST by Myrddin
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To: goodnesswins
We’re buying until Jan 20th....

I'm cutting back now. This may be the last "holiday" season when my paychecks are bigger following the payoff of maximum social security tax around September. I'll be clearing off any and all debt so that I have the alternative of working for smaller compensation when tax rates skyrocket. Any earnings after Jan 1, 2009 will likely experience higher withholding. Don't forget how Clinton made tax hikes retroactive. Lots of us had to cough up extra money in April to compensate for the insufficient withholding caused by the retro activity. Don't put it past Obama and the RATS to have a repeat performance.

24 posted on 11/05/2008 9:34:40 PM PST by Myrddin
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To: Lorianne

Circuit City was nice until Fry’s Electronics opened in Ventura, CA. Then CC became a ghost town. I regularly try to be frugal and sparing.


25 posted on 11/05/2008 9:38:49 PM PST by Falconspeed ("Keep your fears to yourself, but share your courage with others." Robert Louis Stevenson)
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To: Myrddin
At my local supermarket and Walmart, I never use a checker anymore. Dittos if I go to Home Depot.

A lot of entry level jobs are being phased out. I expect fast food restaurants to go to touch screens for orders and payments, so that all they have to have is the cooks and people to hand you your food. The majority of the people working at fast food restaurants can't make change anyway.

One of the things I've wondered about is that we have more manufacturing capacity than we have need. Any of the major vehicle manufacturers, for example, could produce enough cars for everyone to have a new car every three years, if they could afford it. However, as with agriculture, far fewer people are required to produce the product. What happens? How do you match product with consumer and worker with employment?

26 posted on 11/05/2008 9:39:05 PM PST by Richard Kimball (We're all criminals. They just haven't figured out what some of us have done yet.)
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To: VOA

Circuit City Riverside. A number of years ago was in looking for whatever, can’t remember right this minute. I’d make eye contact with a representative, next thing you know the individual was nowhere to be seen. I’d find another Sales person, they’d make some excuse and disappear. I started to walk out and a manager saw I was really ticked off as I headed for the exit, and approached to ask if he could help. I responded with “Are you a manager?” He replied he was, and I told him “There’s a bunch of jerks in there, pointing to the Display and service area where the employees were watching television rather than doing their jobs, that need managing”, and walked out. Never been back.

We’ve spent a lot of money for our refrigerator and freezer appliances at the local Best Buy just down, and across the street from Circuit City because they do have good deals, and their service is great.

A local single store outfit though is even better than Best Buy for price, hospitality, and service which is amazing as one would think the big chain store would have better purchasing power, thus better sale price. Interesting.


27 posted on 11/05/2008 9:42:15 PM PST by rockinqsranch (Dems, Libs, Socialists, Call 'em what you will, they ALL have Fairies livin' in their Trees.)
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To: jerry639
I'm with you! I'm not buying ANYTHING new for the next four years. If I can't get it second hand, I'm not getting it. I'll still shop at Walmart and Smith's for the basic necessities, but that's it. For Christmas this year, I'll probably do gift baskets or make something. Atlas has left the building!
28 posted on 11/05/2008 9:47:40 PM PST by Left2Right ("It's going to be a long eight years after all")
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To: southernnorthcarolina
But isn't on-line shopping just killing the bricks-and-mortar stores

For me, no. Too many things I wan't to see up close and a monitor doesn't do it for me.

Books, music, videos - yes online. Pretty much everything else - going to a store.

29 posted on 11/05/2008 9:52:41 PM PST by IYAS9YAS (Ever notice that Obama supporters chant "O-Bahm-AH" while McCain/Palin supporters chant "U-S-A".)
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To: Lorianne

Start buying a more stuff used and online with NO taxes. :)


30 posted on 11/05/2008 9:54:32 PM PST by US_MilitaryRules (In Loving Memorey of the USA 1776 to 1/20/2009.. May she rest in peace.)
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To: jerry639
No frill buying by me this year.

As Dave Ramsey says, "Crafts for Christmas." Screw Oba$tard's economy. I'm looking out for me and mine first.

31 posted on 11/05/2008 10:03:30 PM PST by radiohead (Buy ammo, get your kids out of government schools, pray for the Republic.)
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To: radiohead
"Crafts for Christmas" is right our alley. My wife sews, embroidries and paints. I have a fully equipped wood shop and more wood than I can ever use. We are already making things for Christmas. The grand and great grand children love for us to provide them with jams, jelly and even corn and green beans that we have stored this fall.

My wife could give almost everyone in the family a sewing machine. Last count she owned 30 of them. lol I am thinking of taking one room in our home and making her a sewing machine museum.

32 posted on 11/05/2008 10:30:09 PM PST by jerry639
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To: Left2Right
Gift baskets are a great idea. Wife and I have done that several times over the years. I make the baskets out of wood from her design. Well, until 2 years ago, when she decided she wanted reindeer baskets. I cut out about a dozen from her design. Only problem was I could never how to put wood slats around the outside. They are still stored over at the shop and I may figure it out one day. lol

I found this great looking basket one night on the internet. Believe it is called a clam basket. Looks neat and not too difficult except the round bent handle. More than likely I will be able to figure out how to make thoses before next Christmas.

33 posted on 11/05/2008 10:42:40 PM PST by jerry639
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To: jerry639
I am thinking of taking one room in our home and making her a sewing machine museum.

Sounds like fun. You're talking to a geek who went to the air conditioning exhibit at the Building Museum in DC, who loves old typewriters and radios. I can definitely see a room full of sewing machines!

34 posted on 11/05/2008 10:52:31 PM PST by radiohead (Buy ammo, get your kids out of government schools, pray for the Republic.)
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To: radiohead
About 3 times a year someone comes dragging in another sewing machine. Some she has are very old and still work. What she will ever do with them all is beyond me.

Oh, I forgot to mention that she has a couple of sergers, two embroidery machines and at least 400 spools of thread around here too. lol

35 posted on 11/05/2008 10:59:45 PM PST by jerry639
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To: Left2Right; jerry639
I'm with you! I'm not buying ANYTHING new for the next four years. If I can't get it second hand, I'm not getting it. I'll still shop at Walmart and Smith's for the basic necessities, but that's it. For Christmas this year, I'll probably do gift baskets or make something. Atlas has left the building!

You know what?

That's a very intriguing idea.

The "bitter, clinging conservatives" in my household have always rebuilt, adapted, used up, done without-- because we don't believe in being wastefull.

IOW, we recycled long before it became a pseudo religion to the MoonBat Left.

Maybe we ought to start a new movement? Kind of a low-level John Galt thing?

36 posted on 11/06/2008 1:16:22 AM PST by backhoe (Just an old Keyboard Cowboy, ridin' the Trakball into the Sunset of America...)
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To: rockinqsranch

Best Buy, Commission, Circuit City, Salary. That is why you get better service at Best Buy.


37 posted on 11/06/2008 1:20:56 AM PST by Republic of Texas (Socialism Always Fails)
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To: Richard Kimball
The self check registers at Walmart, Fred Meyer and Lowe's get plenty of use. Most gas stations are self serve as well.

Servers at most restaurants fulfill the drink, soup and salad creation directly. They also check to make sure the kitchen did the right thing with the order. There may be less need as patronage trails off with less disposable income.

I expect to run my trucks until they can't be repaired anymore. All of them have under 30,000 miles. Except for the 2008 Mariner Hybrid, I have title to all of them. The 3 motorcycles and BV 500 scooter are still in the engine break-in period. Those will suffice for my casual transportation for years.

The need for employees is directly dependent on demand for product and/or service. Less demand means less need for employees. I've always been irked at the construction industry. They seem to think they have a right to be endlessly constructing new buildings. They were continuing to build "to fulfill contracts" in San Diego as inventories of new and old houses soared. Just plain stupid. Unwanted inventory at unaffordable prices.

If Obambi and his leftist minions follow through with their intent to raise taxes, destroy the coal industry and expand socialist spending, our economy is going to crash. The damage is intentional. The America haters have managed to capture political office. The brain dead voters are going to get flogged...along with the rest of us who wanted no part of what is coming.

38 posted on 11/06/2008 8:20:30 AM PST by Myrddin
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To: backhoe
I'm thinking two slogans, for those who understand:

Who is John Galt?

Starve the Beast!

39 posted on 11/06/2008 12:30:30 PM PST by Left2Right ("It's going to be a long eight years after all")
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To: lightman
The store employees either ignore you or act as though you are a nuisance.

A few years ago CC fired all their top commissioned salespeople. Thought they were making too much money.

This is the result.

But look st all the money they saved. /s

40 posted on 11/10/2008 7:28:15 AM PST by Vinnie (You're Nobody 'Til Somebody Jihads You)
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