Monday, January 19, 2009

Circuit City's connected to the landlords the landlords are connected to the banks, the banks are connected to the....

I've been saying for awhile that retail is falling off a cliff and the impact is going to be far reaching. We've seen small bankruptcies so far - Linens N Things, KB Toys, Mervyn's - but I think Circuit City was the one that really got everyone's attention.

Millions of square of feet of retail space just became vacant as of 3/31. In newer, properties there are going to be substantial debt obligations against those properties. How will a lessor find a new retail tenant in this environment? You're right, they're not.

That means more bankruptcies for commercial developers and more troubles for the banks and more troubles for ........ you and I -- John Q. Taxpayer.

Circuit City is the biggest retail bust so far, but it won't be the last - I'd expect that 1 to 5 of these companies might have trouble seeing 2010....

Pier 1
Bon-Ton (sorry Mom, but you can't shock Bon-Ton back to life)
Talbots
Saks
Rite Aid

Cheers.

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