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CNN Live At Daybreak

Strip Malls Far From Immune to Recession

Aired March 07, 2002 - 06:44   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Well I don't have to tell you this. The nation's economy is trying to recover from a very difficult year. One part of the economy hit hard is the strip mall real estate section.

CNN Financial News Correspondent Lisa Leiter takes a look.

(BEGIN VIDEOTAPE)

LISA, CNNFN CORRESPONDENT (voice-over): American suburbs are filled with strip malls. But, lately, they are just as packed with empty storefronts. Some major so called anchor tenants, like Montgomery Ward, Ames, Sears HomeLife and Bradlees have gone bankrupt, leaving big holes to fill in local shopping centers. Fourteen hundred retail stores closed in January, double the number from a year ago. As a result, shopping center vacancy rates are climbing. Nationwide, the rate rose sharply last year to 6.8 percent, the biggest annual jump since numbers were first tracked 20 years ago.

UNIDENTIFIED MALE: This is going to put downward pressure on rents. In the short term it's going to be painful.

LEITER: There will be even more for lease signs after Kmart closes hundreds of stores as planned. This former Kmart location has been abandoned for so long that Dave Bossy now plans to tear it down to make room for a new Home Depot.

DAVID BOSSY, MID-AMERICA REAL ESTATE: I've never been this concerned. I think that the reality is that the good locations will get absorbed and the poor locations will go through a period of languishing.

LEITER (on camera): For those locations not snapped up, owners desperate for some rent money are turning to alternative uses for these storefronts: charities, churches, libraries and governments that may want the space.

(voice-over): This former bedding store was briefly leased to FEMA, but otherwise has been vacant for almost a year.

TERRY MCCOLLOM, MCCOLLOM REALTY: It's going to take a very long to fill these stores. Much longer than we projected and -- or thought we could project. And I think that some of my colleagues may go broke over it. LEITER (voice-over): And while most agree vacancies will keep rising and rents will keep dropping for a while, some analysts predict a turnaround by the end of the year, as long as the economy continues to recover.

Lisa Leiter, CNN Financial News, Riverside, Illinois.

(END VIDEOTAPE)

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