When the movie rental giant, Blockbuster, filed for Chapter 11 bankruptcy, part of the deal including closing four stores in south Florida, along with 134 other stores across the country. In southern Florida, however, retail property could take a huge hit as the empty Blockbuster stores leave gaping holes in malls and strip shopping centers in a concentrated area. A retail specialist with CB Richard Ellis, Paco Diaz speculates that the best way to fill these huge holes in retail space will likely be to divide the areas up to make them idea for smaller-scale users like cell phone retailers and optical stores. However, in the meantime, the stores’ absence will continue downward pressure on rents as landlords are unlikely to get the same rents from smaller retailers – even in larger numbers – that Blockbuster paid.
However, other experts disagree, saying that the subdivision of space will enable landlords to push rents up and that interested tenants, attracted by Blockbuster’s desirable locations and good parking, will likely bid rents up. Although the company insists that customers will not feel the impact of the bankruptcy-related reorganization, commercial real estate professionals are watching the company closely and predicting more closings in “prime suburban neighborhoods.”
Other areas of the country are being affected by the massive retail closing as well, with three Manhattan, New York stores closing in the past six months and another 26 stores in the five boroughs up for “evaluation” and potentially in jeopardy. Thus far, the company has closed around 1,300 stores nationwide.