Retail space opens up as big chains shrink

LOS ANGELES – Surges of large-scale retail bankruptcies such as Circuit City electronics and Mervyns department stores altered the shopping landscape in 2009 – and experts say 2010 is likely to bring even more changes.

Amid a still-tepid economic recovery, big retail chains are expected to continue closing their less productive stores and retrenching on expansion plans. But at the same time, others will be hurtling into the breach to take advantage of falling rents and vacancies in neighborhoods they couldn’t get into a few years ago.

“The prediction for next year is more resizing and relocating of retailers,” said real estate broker Richard Rizika of CB Richard Ellis.

There are almost 100 empty big-box retail stores in Los Angeles County, according to a study by Rizika. They have a combined total of 4.5 million square feet, or more than 78 football fields’ worth of vacant space for rent or sale. Most of that came from liquidated businesses Circuit City Inc., Mervyns and home furnishings chain Linens ’n Things Inc.

Neighborhood and community shopping centers in Los Angeles experienced falling rents and rising vacancy in the third quarter, according to real estate data provider Reis. About 5.7 percent of the space is empty, a slight increase from a year earlier.

Taking advantage of bargain rents, big-box retailers PetSmart Inc. and Staples Inc. are introducing smaller stores that will enable them to fit into more expensive or more urban locations where space is at a premium, Rizika said.

Meanwhile, bargain-chic women’s clothier Forever 21 Inc., once a chain of small boutiques, is upping the ante by moving into full-size department stores abandoned by Mervyns.

Nordstrom Rack, the lower-priced cousin of Nordstrom, snagged some of the empty spots too, but company spokesman Colin Johnson said the expansion doesn’t reflect a companywide shift into selling lower-priced goods.

“This was a strategy we put in place before the downturn began,” he said, and the recession has given Seattle-based Nordstrom Inc. the chance to get into new locations at bargain rates.

Also moving aggressively into big spaces vacated by failed retailers is Wisconsin-based Kohl’s Corp., which added seven new stores in Los Angeles County in 2009. The mid-tier department store has assumed leases and bought empty buildings throughout California as part of a growth strategy.