Corporate vacancies start to fill

Openings left by bankrupt businesses leading to a 'tenant's world'

Staff WriterApril 10, 2010 

  • There were five Circuit City stores and seven Linens N Things stores in the Triangle, all of which went vacant when those retailers went bankrupt and closed. Here's what has happened so far.

    Circuit City

    Apex: Still vacant

    Cary: Became hhgregg

    Durham: Still vacant

    Raleigh (near Triangle Town Center): Still vacant

    Raleigh (near Crabtree): To become The Container Store

    Linens N Things

    Apex: Became A.C. Moore

    Cary: Still vacant

    Durham (near Southpoint): Becoming Nordstrom Rack this fall

    Durham (New Hope Commons): Became Buy Buy Baby

    Garner: Still vacant

    Raleigh (near Triangle Town Center): Still vacant

    Raleigh (off Lynn Road): Still vacant

It took almost a year for the landlord to find a replacement tenant for the Circuit City store near Raleigh's Crabtree Valley Mall.

And the new lease is a big one: North Carolina's first The Container Store.

The store is set to open on Oct. 16 and will employ about 60 people.

But The Container Store is only taking half the building. No tenant has been announced for the other half.

That's a testament to how tough the commercial real estate market has been lately, with several large anchor spaces remaining dark for months at a time.

More than 3.6 million square feet, 8.2 percent of the Triangle's total, were vacant during the second half of 2009, according to Karnes Research. That vacancy rate was up from 6.5 percent during the same period in 2008 and is the highest rate recorded since Karnes began tracking the Triangle market more than 14 years ago.

"It's a tenant's world right now," said Connell Radcliff, president of 1st Carolina Properties in Cary. "We've had people say we want to be here, but we're not opening stores yet. Backfilling boxes is always a challenge, but if it's good real estate, it's going to get leased."

The Triangle was left with several large vacant buildings after two large retailers, Circuit City and Linens N Things, filed for bankruptcy within months of each other in 2008 and 2009.

Electronics retailer hhgregg took over the former Circuit City across from Cary's Crossroads Plaza, and the state's first Nordstrom Rack is coming this fall to a former Linens N Things in Durham across from The Streets at Southpoint mall.

But the large majority are still sitting vacant.

The Container Store announcement leaves three former Circuit City stores in North Raleigh, Durham and Apex dark. Four of the area's seven Linens N Things stores remain without a replacement tenant.

In many cases, landlords are subdividing their larger spaces, Radcliff said.

"They're not going to just stop opening stores," he said. "[Retailers] are looking at smaller store formats to keep their occupancy costs lower. But it doesn't mean that deals aren't getting made."

In the case of the Glenwood Avenue Circuit City, the property is being sold to Schlosser Development. The Texas company specializes in property development, said Rick Marshall, principal with Raleigh's Glenmoor Associates, which owns the property.

The deal has not closed yet, and Marshall declined to say how much the deal will be for, but he said the economy definitely slowed the search for a new tenant.

"I do think that it's more difficult to lease large spaces, which is why Schlosser is subdividing the building," he said. "We have what many people consider to be one of the best locations in North Carolina. I think we of course were handicapped because it was a large building. But we benefited by having a good location."

Staff writer David Bracken contributed to this report. or 919-829-4649

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