•At least two retail developments are delayed indefinitely in Florida's Miami-Dade County, an area that's among the hardest hit by retail vacancies. Nearby Broward County, home of Fort Lauderdale, had the biggest increase in retail vacancies last year, according to commercial real estate research company CoStar. Due in part to the reduction in revenue from retail, the growth in city services for 2009 will be less than 1%, says Michael Boudreaux, budget director for the city of Miami.
Too many stores?
Part of the problem is that the U.S. is "overstored," as retail analyst Jennifer Black and even store officials often say. Indeed, few can argue that the more than 200 million square feet of retail space added each year since 2004 was truly needed. J.C. Penney CEO Mike Ullman, chairman of the National Retail Federation, estimates that there is at least 100 million more square feet of retail space than the market needs.
This year alone, discount clothing chain Goody's announced it would liquidate its nearly 300 remaining stores. Circuit City followed a week later with news that it would shutter its 567 remaining locations, and retailers ranging from Home Depot to New York & Co. have been shuttering stores.
These and other expected closings are expected to hit already struggling areas the hardest.
"Small-market malls in the Rust Belt states and the Northeast will likely experience the brunt of these store closings," says Jeff Green, a sales forecaster and strategic analyst for malls and retailers.
These include malls where business was rarely brisk even before the recession took hold. Because such centers typically fall in areas that are the least likely to see any population growth, experts say big chains that need to downsize are likely to pull out of them first.
As for new shopping centers, even the stores that already signed leases are often trying to get out of them or are relieved that the projects are delayed.
"A lot of developments may or may not get finished," says Stuart Eisenberg, director of real estate services at accounting and consulting firm BDO Seidman. "The problem right now is the availability of sufficient funds people need to borrow. The same goes for lines of credit for the stores."
Eisenberg says, "There's no appetite from a capital perspective for new deals." Everything, he says, is on hold until the debt and equity components of deals can be re-established.
Eisenberg says several of his clients have purchased retail developments in the last three to five years and now, "No one knows how to fill them."
What to do with empty ones?
It may well be late 2010 before some of the planned shopping center development is back on track, says International Council of Shopping Centers chief economist Michael Niemira.
He predicts up to 3,000 shopping centers, mostly smaller strip centers but some larger malls, will close this year.
"If that economic activity is taken out of the community, that's a tremendous blow," says Bieri, president of The Bieri Co. in Detroit.
So what to do with all the empty retail space, especially the vacant so-called big boxes dotting the landscape with the liquidations of Linens 'n Things and what's in progress at Circuit City?
Kohl's recently announced it will take over the space in several of the liquidated Mervyns stores. In Connecticut, Texas and elsewhere, empty big-box stores are sometimes turned into haunted houses at Halloween and other kinds of seasonal stores.