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Alternate Tenants on the Horizon for Closed Borders Spaces

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It feels like in the past two days the entire retail real estate industry has been talking about one thing--Borders. The questions ranged from whether Borders will be able to survive long-term (many people don't think so, judging by the discussion on Retail Wire), to how store closings will affect nearby retailers.

The biggest question of all, of course, is what's going to happen with all that vacant space? Owners of centers where Borders serves as an anchor might be facing a significant drop in occupancy levels, according to a story in The Wall Street Journal:

The 4.9 million square feet of store closings will be especially painful for smaller shopping centers anchored by Borders's superstores. Their average vacancy rate will more than double to 9.5% from 4.2%, according to commercial real estate researcher CoStar Group. That's higher than the national average of 7.2%, the firm said.

But the outlook might not be as bad as many people fear. There are expanding retailers out there that might be happy to move into Borders stores in select markets. Growing electronics retailer hhgregg might be one. Discounter T.J. Maxx and apparel retailer Forever 21 might be others, according to our sources.

For now, the bankruptcy court judge has given Borders the green light to use $400 million in interim financing and the chain is set to remain in operation for some time. We'd be interested to hear your perspective on Borders' ultimate fate. Do you think it's a goner? Is there still a possibility that it will be acquired by Barnes & Noble? And is there still a future for brick-and-mortar bookstores in this country? Let us know what you think.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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