Posted in building sale, commercial real estate, downsizing, Forecast, headquarters, lease, office space, oregon, portland, rental rate, retail brokerage, square feet, Trends, Vacancies, tagged bankruptcy, blockbuster, cancel lease, Ch. 11, commercial real estate, downsizing, Hollywood Video, lease terminations, Movie Gallery, netflix, office space, redbox, rental rate, retail stores, sony pictures, square feet on February 4, 2010 |
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Between Sony Pictures laying off another 450 employees in March and Movie Gallery filing for Chapter 11 again, one would find it hard to believe the entertainment industry just came off one of their biggest years ever. But technology, maybe more so than the economy, seems to be the major impetus behind this latest round of layoffs and closures. It would appear if one fails the other may soon follow?
Sony Pictures, despite making headlines with 18 Oscar nods this week, is cutting 450 jobs in March (or 6.5% of its 6,800 person workforce). This comes one year to date after they let go of 250 employees. According to Sony Co-Chair Amy Pascal, their industry has been affected by the economy (obviously) but also technology. With DVD-buying habits changing so much over the last two years due to outlets like Netflix and Redbox offering cheap rentals, the channel considered the last chance to make a profit on films that underperform at the box office is quickly drying up. And since the rule of thumb is 75% of films underperform, that leaves a pretty significant gap to eclipse with DVD sales and rentals… which brings us to the next group.
Movie Gallery is filing for Chapter 11 Bankruptcy for the second time since 2007. They have been hit hard during the recession, but have also struggled to stay above water since other, less expensive alternatives, ie Netflix and Redbox, entered the home movie market.
Underwater by as much as $540 million since they acquired Hollywood Entertainment Corp for $800 million back in 2005, Movie Gallery first filed Chapter 11 in October 2007. At that time they operated 4,430 stores. When they emerged from bankruptcy in May 2008, 3,300 stores were still in operation. Since then, they have closed an additional 700 stores and have only 2,600 left open for business.
Movie Gallery employs about 19,000 people and reported $1.8 billion in annual revenues for 2009, down from $2 billion in 2008. They plan to cancel 856 store leases, most of them Hollywood Video stores. The average size of a Hollywood Video store is between 5,000 to 7,000 SF . This is a large foot print for a retail store of this nature. Blockbuster already started shrinking the average size of their stores in an effort to cut costs (after closing another 960 stores in September 2009).
California is leading the list for Movie Gallery/Hollywood Video store closures followed by Texas. The stores closing in Oregon are below:
- 8001 SE Powell Blvd, Suite O – Portland
- 3610 Center St NE – Salem
- 17401 SE McLoughlin Blvd – Milwaukie
- 11875 SW Beaverton Hillsdale Hwy – Beaverton
- 825 W 7th Ave – Eugene
- 3411 Commercial St – Salem
- 2770 Gateway St – Springfield
- 11198 SW Barnes Rd – Portland
- 1328 SW Baseline Rd – Hillsboro
- 3030 NE Weidler St – Portland
- 1580 Mount Hood Ave, Suite B – Woodburn
- 8112 SE 13th Ave – Portland
- 1117 NE Broadway – Portland
- 3557 SE Hawthorne – Portland
- 14718 SE Sunnyside Rd – Clackamas
- 7275 SW Dartmouth – Tigard
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Posted in building sale, commercial real estate, downsizing, lease, rental rate, retail brokerage, square feet, Trends, Vacancies, tagged albertsons, bankruptcy, cerberus, closings, commercial real estate, crabtree & evelyn, daphnes, exit plan, rental rate, square feet, walking company on January 29, 2010 |
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Retail continues to take hits from slumping spending as the “waiting” game comes to a close for many. Here are few updates on national chains unable to ride out the storm any longer:
The Walking Company
On the heels, no pun intended – well maybe, of a previous post regarding the closure of many stores, The Walking Company announced more store closings. The company is now seeking to close an additional 40 stores on top of the 90 it already announced would be closing. This would leave around 80 locations nationwide. The average store size hovers around 1,500 SF.
Crabtree & Evelyn
The bath and body products store (and hotel favorite supplier of soaps and shampoos) has filed a bankruptcy exit plan that includes 35 stores planned for closure. This will leave the chain with 91 stores. The typical store size is 2,250 SF.
Daphne’s Greek Cafe’
We all saw this restaurant chain go dark in downtown Portland (Alder and 6th) and on Cedar Hills Blvd near Beaverton (by the old Joe’s store now also dark) back in late 2009. The chain filed for bankruptcy this month and in addition to the two aforementioned locations closed 12 others. The company is now down to 69 restaurants in CA, AZ, CO and WA. The average size of each restaurant is 2,000 SF.
The Idaho-based grocery chain is closing 11 stores, mostly in Florida and Colorado. This is, interestingly enough, not the same group as SuperValu which operates 463 Albertsons in the Northwest, Nevada, and California. Who knew?
Albertsons LLC is owned by private equity firm Cerberus Capital Managment (think Chrysler), which sold 25 Florida Albertsons to Publix in 2008.
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Posted in building sale, commercial real estate, downsizing, lease, rental rate, retail brokerage, square feet, Trends, Vacancies, tagged bankruptcy, Chapter 11, closures, commercial real estate, general growth properties, lease cancellations, lease terminations, macerich, pioneer place, retail property, square feet, vacancy, walking store, washington square on December 10, 2009 |
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Well-known shoe retailer The Walking Company filed for bankruptcy protection on December 7th. The retailer plans to close as many as 90 underperforming locations throughout the U.S. As part of these closures, the company is seeking court approval to reject the leases as well. If successful, The Walking Company hopes to emerge from Chapter 11 in the first half of 2010.
The footwear portion of their business experienced strong growth between 2005 and 2008 and added roughly 140 stores over this period. Unfortunately, another brand under The Walking Company umbrella, Big Dogs apparel, had 230 stores and falling sales over this same period. Walking Company liquidated the line, but took a $12 million net loss as a result.
With a crumbling economy in 2008 and above market rental rates on newer stores, the company was ultimately forced into lay off mode, letting go of 500 employees and delisting itself from NASDAQ. Their rapid expansion at a time when retail rents peaked has the company now looking to “walk away” from 90 lease obligations in a number of markets including Oregon.
The two locations closing in Oregon are at Pioneer Place and Washington Square Mall. The largest number of closures are in Florida, with 18 stores shuttering their doors.
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Posted in building sale, commercial real estate, downsizing, headquarters, lease, retail brokerage, square feet, Trends, Vacancies, tagged bankruptcy, clackamas town center, commercial real estate, general growth properties, ggp, pioneer place, retail real estate, Simon Property Group, square feet on April 16, 2009 |
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After numerous indicators told us the second largest mall property holder was looking at bankruptcy, the trigger was finally pulled today as General Growth Properties (GGP) filed for Chapter 11 banktruptcy protection. This is the largest real estate bankruptcy in U.S. history, with around $27 billion in debt on the books. The company intends to continue operating 200 properties (including Pioneer Place and Clackamas Town Center) at least for now. Several competitors including Simon Property Group, the largest owner of mall properties, are waiting to see what assets they can snatch up for cheap from this reorganization.
This will not be the end of major real estate holding groups going bust. The pipeline of loans coming due over the next 12 months is large and looming. GGP just hit the wall first.
For the complete story – go here http://budurl.com/gd25
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Posted in commercial real estate, downsizing, lease, retail brokerage, Trends, Vacancies, tagged bankruptcy, best buy, co-tenancy, kick out clause, lease, national real estate investor, retailers, shopping centers on February 26, 2009 |
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The next time you drive by a shopping center and notice yet another store has disappeared from the monument sign, the reason could be an exercised co-tenancy clause. Think Circuit City by Washington Square.
Co-tenancy clauses are legal passages included within retail lease agreements that allow retail tenants to cancel their lease or seek major rent reduction should a major anchor tenant, think Nordstroms or Best Buy, vacate the shopping center. The thought behind this type of clause was that most retailers strategically feed off of other, complementary retailers. If that giant among men, er, people is no longer there to draw in visitors to a shopping center, then most certainly the smaller retailers will suffer. Smart for retail tenants – but oh so bad for building owners.
Exercising the co-tenancy clause is proving to be devastating to Landlords in this economy. If a major retail tenant cancels its lease, then the door is opened for others to follow. It is the perverbial House of Cards effect, placing entire shopping centers at risk of going dark entirely. Dark stores deter new tenants and shoppers causing cash flow to dwindle. The ultimate effect: the landlord is unable to make his debt service and bankruptcy is in their future.
Another popular clause is the “kick-out” which allows a tenant to leave with six months notice if their sales dip below a specified level. This clause essentially binds the hands of the landlord by prohibiting the ability to seek penalties or recover costs if the retailer gives notice. In today’s economy however, shopping centers are desperate for credit tenants and few are likely to refuse the inclusion of these clauses in a lease agreement. For full details go to the story by Denise Kalette at National Real Estate Investor – http://tinyurl.com/cbov3b
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