Real Insight. Real Estate.

I am certain most of our readers are aware of the glut of commercial space that remains vacant in today’s wiltered economy.  We’ve even shown YouTube clips on this very site of people simply driving down the road, capturing storefront after storefront, strip center after strip center, vacant as a Ghost town right out of the Wild West. And as retailers continue their cutbacks, more and more cities are facing their big box stores becoming “Ghostboxes.”

Unlike strip centers which may have extremely low occupancy, or even those that are 100% vacant, big boxes suffer from the unappealing aesthetic design of the building itself.  Without question, these spaces are much more difficult to back fill with lower rent, or lower credit tenants, because even they have become too picky simply to go anywhere.  After all, for a retailer, any retailer, whether big or small, location is everything. Would you want to go into a huge, warehouse-like structure with no windows and super-high ceilings if you were a dry cleaner, a restaurant, a tanning salon or a pizza shop?

The International Council of Shopping Centers said 6,913 retail stores — of all types — announced closures last year, compared with 4,603 in 2007.  Some of these “ghostboxes” have been transformed into museums, community centers, hospitals or schools. Future tenants, however, can be restricted by the former retail chain. This is due to lease clauses that prohibit competing stores from occupying the space should the tenant ever go dark.  Instead, struggling retailers opt to pay rent on dark space, which of course, leaves the landlord marginally satisfied, and the community ugly.

Some towns are even being creatively proactive with their Ghostbox problems.  For example, the Chamber of Commerce of the Southern California city of Burbank has opted to attempt to hang things in vacant store windows to give of fthe appearance to tourists that everything is still hunky dory.   And its not just the civic minded who are attempting to stop the bleeding. Yes, despite all the bailouts and government ownership of once major corporations might suggest a theoretical step in the direction of socialism, the capitalist spirit that made America a dominant world superpower still lives today.

For example, Excess Space Retail of Lake Success, N.Y, specializes in real estate disposition and lease restructuring for retailers, including Home Depot, Wal-Mart, JC Penney and Kmart. The company has seen a more than 30 percent jump in the number of empty retail locations in the past year, handling over 2,000 locations for more than 50 retailers.

As the saying goes, when a door closes, a window (assuming there actually is a window) opens.

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