This is somewhat ominous news on the excess space front. Circuit City was planning on auctioning 155 leases today, but decided to cancel the auction because of a lack of bidders. Circuit City instead plans to simply break the leases meaning that overall it will break 304 leases.
This raises some interesting questions. Is the excess space market becoming saturated? Is there something about Circuit City's leases that made them less attractive than others? For example, were they paying higher rates than other big box tenants? Would a landlord rather have Circuit City reject the lease and get it back or have it resolved in an auction where you might not be able to control who comes in and takes over the space?
Bankrupt electronics chain Circuit City Stores Inc. did not receive enough bids on leases for stores it plans to shutter, forcing it to cancel an auction set for Thursday, a company spokesman said on Wednesday.Circuit City, the second-largest U.S. electronics retailer, is in the process of liquidating merchandise at 155 stores in 55 markets and plans to conclude those sales by the end of the month, Circuit City spokesman Bill Cimino said in an email.
The chain had received permission from the U.S. bankruptcy court to auction the leases for all but one of those stores.