Borders Shuts Stores; 4.9 MSF Hits Market
- Feb 18, 2011
February 18, 2011
By Barbra Murray, Contributing Editor
With the U.S. Bankruptcy Court for the Southern District of New York having signed off on the store reduction program that is part of Borders Group Inc.’s reorganization, the book retailer has tapped DJM Realty to lease 200 underperforming stores designated for closure by the end of April. The leases account for a total of just over 4.9 million square feet of retail space.
The stores span 35 states, including Alaska and Hawaii, Washington, D.C., and Puerto Rico; Borders international franchised operations were not included in the bankruptcy filing. The spaces range in size from approximately 12,900 square feet to 42,700 square feet, with the average store size being 24,600 square feet.
“A lot of the sites have excellent options,” Brooke Horn, director of marketing with DJM, told CPE. “Almost 30 percent have two-plus floors and some have even more. We have a lot of great spaces.” Thirty-five of the 200 stores are located in California and feature rents as low as $4.83 per square-foot and as high as $58 per square-foot.
According to Marcus & Millichap Real Estate Investment Services, the national retail vacancy rate began to fall in 2010 after skyrocketing 310 basis points through the recession, and is now on track to drop to 10 percent by year’s end. Although the retail market has yet to fully recover, DJM is confident about leasing up the Borders stores. “We’ve had a lot of interest in available properties from different retailers and a few non-retailers,” Horn said. “Some of them are supermarkets, gyms, bowling alleys, restaurants. We’ve had numerous phone calls and lots of inquiries.”
Among the factors working in DJM’s favor is the fact that many of the stores are located in markets with high barriers to entry including Atlanta, Boston, Chicago, Dallas and New York, as well as locations in Northern and Southern California.
Agree Realty Corp. owns 13 of the 200 properties occupied by Borders under triple net leases, in addition to the company’s 460,000 square-foot corporate headquarters in Ann Arbor, Mich.