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Press release from PR Newswire

Colliers International White Paper: Vacated Big Box Sites Drawing New Wave of Retail Leasing

Thursday, April 28, 2011

Colliers International White Paper: Vacated Big Box Sites Drawing New Wave of Retail Leasing09:25 EDT Thursday, April 28, 2011--Underlying fundamentals, population density, Sunbelt states key factors in re-tenanting vacated Circuit City, Linens 'n Things, Mervyns and Gottschalks locations--SEATTLE, April 28, 2011 /PRNewswire/ -- The national retail real estate market is recovering, with many retailers finding space at quality locations formerly occupied by big box tenants that have gone out of business, according to a new White Paper from Colliers International. Using the recent bankruptcies of Circuit City, Linens 'n Things, Mervyns and Gottschalks as a model, the White Paper: Re-Tenanting Bankrupted Big Boxes: Paving the Way for Retail's Rebound, examined the recovery timeline and trade area characteristics of those retailers' individual locations as a means to help predict the recovery behavior of future big box vacancies.Colliers International took a sample of the 1,259 store closings and 56 million total square feet of vacated space from those former retail tenants. Analysis revealed that:In centers where the big box tenant occupied 60-90 percent of the total center space, it took an average of 7 quarters to refill the vacated big box space?nearly double the average of 3.7 quarters.In locations where one of the four bankrupt big box tenants comprised less than half the total center, the likelihood of re-tenanting the vacated space was approximately 40 percent. Vacated bankrupt big box spaces leased up faster in the most densely populated areas (2.4 quarters) compared to the least densely populated areas (3.4 quarters)?an average difference of approximately 100 days.Bankrupt big box tenants in Sun Belt states leased up faster than those in non-Sun Belt states ?144 fewer days, on average. "The retail sector is absolutely on the rise, marked by a flight to quality," said Mark Keschl, National Director of Retail for Colliers International. "The recent bankruptcies of these four retailers caused disruption, and there will likely be more pain along the way. Blockbuster and Borders are closing stores, and many other retailers are also pursuing strategic downsizings and closures. But what we see here is that underlying retail real estate with good fundamentals continues to attract tenants. The location and size of those spaces has a nuanced effect on how quickly they re-let."The White Paper also revealed that the bankrupt big box vacancies did not cause a ripple effect across the centers in which they were located. Retail centers are always at risk of a domino effect among vacating retailers; as one leaves, others may follow. Yet only 1 percent of additional vacant square footage was observed in centers that housed at least one of the bankrupted big box tenants. Other notable findings from the White Paper:In the most densely populated trade areas, Sun Belt locations averaged 1.7 quarters to re-let versus 4.4 for non-Sun Belt locations?a difference of roughly 243 days.Freestanding big boxes averaged 2.9 quarters to re-lease versus 3.6 quarters for multi-tenant spaces.By January 2011, the average vacancy rate for retail centers where big box space was vacated decreased to 17.3 percent?an improvement, but still more than triple the rate prior to when their big box spaces went dark. However, centers that re-let the big box space averaged a 5.4 percent vacancy rate, versus 28.5 percent for those centers where the vacated spaces remain empty."As the retail sector continues to improve, the market looks to Colliers International as a key source of sophisticated data and analysis," said Dylan Taylor, CEO of Colliers International in the U.S. "Our goal is to assist a wide range of tenants, owners and investors make strategic real estate decisions that impact their businesses. Our Big Box Retail White Paper is another example of the timely, best-in-class intellectual capital we provide. "Note to Editors: A PDF version of the full White Paper is available at: Colliers InternationalColliers International is the third-largest commercial real estate services company in the world with 15,000 professionals operating out of more than 480 offices in 61 countries. A subsidiary of FirstService Corporation (NASDAQ: FSRV; TSX: FSV and FSV.PR.U), it focuses on accelerating success for its clients by seamlessly providing a full range of services to real estate users, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and research. Commercial Property Executive and Multi-Housing News magazines ranked Colliers International as the top U.S. real estate company and the latest annual survey by the Lipsey Company ranked Colliers International as the second most recognized commercial real estate brand in the world.  SOURCE Colliers InternationalFor further information: Richard Mulieri,, or Russ Colchamiro,, both of The Marino Organization, +1-212-889-0808