by Calculated Risk on 1/02/2010 11:59:00 AM

From Roger Vincent at the LA Times: Retail space opens up as big chains shrink

Amid a still-tepid economic recovery, big retail chains are expected to continue closing their less productive stores and retrenching on expansion plans. But at the same time, others will be hurtling into the breach to take advantage of falling rents and vacancies in neighborhoods they couldn't get into a few years ago.

"The prediction for next year is more re-sizing and relocating of retailers," said real estate broker Richard Rizika of CB Richard Ellis.

There are almost 100 empty big-box retail stores in Los Angeles County, according to a study by Rizika. They have a combined total of 4.5 million square feet, or about 78 football fields' worth of vacant space for rent or sale. Most of that came from liquidated businesses Circuit City Inc., Mervyns and home furnishings chain Linens 'n Things Inc.

The vacancy rate is expected to rise further in 2010, and this will continue to push down rents - leading to more distressed retail properties - and also less investment in Multimerchandise shopping structures.

Reis is expected to report the U.S. mall vacancy rate for Q4 next week. Reis reported in October that the strip mall vacancy rate hit 10.3% in Q3 2009; the highest vacancy rate since 1992.

"Our outlook for retail properties as a whole is bleak," Victor Calanog, Reis director of research, said. "Until we see stabilization and recovery take root in both consumer spending and business spending and hiring, we do not foresee a recovery in the retail sector until late 2012 at the earliest."