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Borders bankruptcy another blow to retail CRE February 25, 2011

Posted by Erik Swanson in Articles, Research/Data, Retail News.

Last week, Borders Books filed bankruptcy and will reorganize to focus on e-commerce rather than book selling. This leaves Barnes & Noble as the primary brick and mortar book retailer. Borders’ bankruptcy plan includes shutting down 200 locations across the country in the first phase and more are expected. There are 20 some locations between Bellingham, WA and Salem, Oregon but only 2 locations, Lynnwood, and Gig Harbor have been slated to close so far. See closure list here at the WSJ. Center owners have been dealt yet another blow and are left wonder if the effect will be as severe as when other large retailers like Linen N Things, Circuit City went dark. The location of these closed stores, as always, will be the determining factor in how successful they are in re-tenanting these spaces.

Besides the real estate owners, CMBS holders are also nervous about their exposure to the Borders locations that are closing. According to this article in Retail Traffic  there could be as many as 50 shopping centers with Borders locations closing that are part of CMBS offerings.  A larger effect may occur if (or when) these closures trigger occcupancy clauses and  landlords have to provide further concessions to other large tenants.








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