A teetering big box tenant is closer to falling over. Borders recently asked a bankruptcy court permission to close just over 50 stores on top of the 225 it already shuttered.
The surprising thing isn't that Borders is closing mores stores. We've known that scenario could play out for a while. What is especially bad news for landlords is the fact that Borders is admitting that these are profitable units, or at least they have below-market rents.
Whatever the reason for this, it sends a very bad message to landlords. Borders is saying: "You can provide us cheaper rent and a good real estate environment to do well, but we will close the store anyway."
Don't get us wrong, shopping-center owners are just as guilty as retailers when it comes to the rampant expansion of concepts that can't support their growth plans. But when some of those locations do well, the owner needs to be rewarded.
Especially when, like in the situation of Blockbuster, a retailer made its own missteps in not keeping up with technology.
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