As retailers fight to keep their doors open, retail centers must do the same.
The list of troubled national and regional chains includes a who’s who of familiar names. Sears, Kmart, J.C. Penney, Macy’s, Radio Shack, Staples, Payless Shoe Source, Gordmans and Golfsmith all are in various stages of closing bricks-and-mortar stores. Sports Authority and Family Christian Stores have shuttered altogether.
Whether it’s big-box anchors or smaller stores, retail closings put pressure on shopping center owners and landlords to fill their empty spaces; they need to keep rents coming in or risk their own financial woes. Many borrowed to acquire their properties and risk foreclosure if they fall behind on loan payments – something that happened occasionally in Colorado Springs during the Great Recession.
Too many vacant storefronts also are a turnoff to customers, who might go elsewhere – threatening the bottom lines of remaining retailers. And shopping centers without tenants can expect a decline in property values, which could hurt a local government’s tax base.
“It used to be that you had an anchor, a national anchor tenant, and that was a golden thing to have in your basket of retailers because they never went anywhere,” said Jay Carlson, managing broker and principal at Front Range Commercial in Colorado Springs. “But now, at any time, a retailer can decide to shutter a bunch of stores. And all of a sudden, you don’t have that cash flow anymore.”
Competition from Amazon and other online shopping sites along with changing consumer habits have hurt today’s traditional retailers and shopping centers, local industry experts say. Consumers shop and buy online with their home computers or mobile devices. Some visit a store to kick the tires on a product, but they walk out the door, pull out a cellphone and make their purchase.
Likewise, many consumers no longer wander through a mall or around a strip center to shop; their attention spans are shorter, and they need other reasons to spend time shopping beyond just buying clothes or appliances.
“It seems like gyms and entertainment venues and some other uses were dirty words at retail shopping centers,” said Dan Rodriguez, a senior associate with the Springs office of national real estate firm CBRE. “But now, the highest-value tenants are the ones that are just physically bringing people into the center.”
At a conference he attended recently, Rodriguez said, experts suggested that bricks-and-mortar retailers aren’t necessarily losing out to the internet; instead, they’re getting beat by boredom.
“What retailers need to do now, they’re competing for our attention,” he said. “There has to be another reason, another drive for you to go spend time at a retail center because just buying the product isn’t enough anymore. You can buy the same product at Amazon. So there’s got to be other, compelling reasons for you to justify your time in physically going to a retail center.”
Online competition and changing consumer habits might be today’s reasons for retail closings. But shopping center owners and landlords faced similar downsizings during and after the Great Recession. Circuit City and Borders Books & Music were some of the retailers that went out of business in the recession’s aftermath, leaving gaping holes in a few Colorado Springs shopping centers.
Growth in the Pikes Peak region also has been a factor. Over the past two decades, some Academy Boulevard shopping centers saw major tenants bolt for newer and…