Struggling retailers seeking help with the rent - Orlando Business Journal:

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Retail vacancies are expected to riseto 11.2 percent overall in the market, accordinv to a research report by , but severalp retail owners say that projection is likely too low. “I’ not sure that takes into accoun t the retailers that are not payinbg or are in the procesw ofgetting evicted,” said Mike senior leasing representative with , which owns several shoppinyg centers around Atlanta. “I thinkl [retail vacancy] may be closer to 12.5 More retailers are askinvg for helpwith rents, and both renewinhg leases and signing new tenants is becoming much more challengingt for landlords. Retail leasing activity is down about 50 percenty fromlast year.
Atlanta rankws among the top 10 cities in the Unitedc States for the amount of retail space per Asof 2005, Atlantw had about 27 square feet of retaio space for every man, womanj and child, according to the National Research Bureau . More retaileres want help with rents, said Rob Mimms, presidenrt of , which is the fifth-largest owner of retaikl space, according to the June 6 Atlanta Business Chroniclre list of top ownerz of Atlantareal estate. Tenants in the middle of thei leases are seeking rent he said. “That’s a little out of the box fromwhat we’ved seen in the past couplee of years.” Lease renewals for tenants are also becomintg more challenging, Mimms said.
He expectds to see more retailers askingb for more rent or other concessions or less spacse as they renewtheir leases. “Iy is much easier to keep existing tenants than to get new tenants inthis market, and it’s also less expensive,” he A typical lease renewal costs about two months rent in improvements and concessions, Mimms said, but a new tenant costs about 12 months rent when spacs renovations and commissions to brokers are factored in. Mimms Enterprisex owns about 4.3 million square feet of retail , the sixth-largest owner of retail spacee inmetro Atlanta, is a low-cosyt provider of retail space in many President Jack Halpern said.
But “if our tenantsd are not able to make a living in the spac e they rentfrom us, our whole businessd plan would be impacted.” Right now, more retailers are exitingt than entering shopping said Halpern, who owns nearly 3.6 milliob square feet of retail space. Retai l leasing is down 50 percenrt over last year inAtlanta “and expectationas point to weaker tenant demand in 2009,” Marcuxs & Millichap’s report said. “The pool of replacement tenants is much smaller now than it was a year saidShirley Gouffon, senior vice president of , the seventh-largest retail ownert in metro Atlanta.
“Most [national retailers] have curtailed expansion plans and thers are not as many dealseout there.” With potential new tenants, landlords are making extra-sure they can pay the rent. Seligg Enterprises, which owns roughly 3.6 million squarse feet of retail space, is “scrutinizingy tenants more nowthan ever,” said President Stever Selig. “Credit is always a top concern, but now it’ s one of the top priorities. Dealz we would have done withoutthinking about, now we’rwe concerned about the credift of the prospect.” Retail leasintg remains fairly strong in pockets of metrop Atlanta.
Metro Atlanta’s top retail submarket, the downtown/Midtown/Buckheacd corridor, saw retail vacancies decline in the past yearto 5.3 according to Marcus & Millichap. That compares with the Forest Park/Clayton area, the lowest of the top 10 with retail vacanciesat 11.2 Retail rents in the urban core run abou $22.11 per square foot, compared with Forest which runs about $11.68 per square the report said. “We think thered are pockets that will buck the said Selig, who is currently building the $2 billion 12th Midtown mixed-use project, which will include office, residential and retail space. “We’re stilll building in Midtown.
I believde Atlanta will very likely turn around before other parts ofthe country.”