Blockbuster bankruptcy could mean added vacancy
The Atlanta Journal-Constitution
Months before the movie rental company filed for bankruptcy yesterday, Andre Koleszar, the vice president and regional officer for shopping center developer Regency Centers, already lost two Blockbuster stores.
In metro Atlanta, he has five other locations. He has no idea how many, if any, will remain after Blockbuster decides which storefronts to shutter.
"It's purely a crap shoot," he said. "We have no idea what leases they're going to reject or keep."
The company's website shows Blockbuster with 30 storefronts in metro Atlanta, where retail vacancy rates are high. Reports in The Wall Street Journal say the chain expects to close half of its roughly 3,000 stores nationwide. Stores average around 5,000 square feet. Blockbuster did not return The Atlanta Journal-Constitution's request for comment.
In the heyday of development, Koleszar said, Blockbuster was a wonderful partner -- they put a national name in a center and took end caps or other desirable space, paying a very good market rent.
As the market for video rentals has shifted to by-mail companies such as Netflix and on-demand services through cable companies, though, Blockbuster has driven less traffic to retail centers. For that reason, the loss of Blockbuster stores will not have as large an impact as they once would have, said Brad Glenn, vice president of developer Southprop.
Glenn said that if leasers are able to get new tenants into the spaces Blockbuster leaves, it will add new vibrancy to the centers. However, getting those tenants will likely be challenging, depending on the health of the rest of the development.
Jeff Dudash, a spokesman for Duluth-based NCR Corp.,which licenses the Blockbuster name at its video kiosks, said there is still a market for DVD rental. With about 200 kiosks around Atlanta, NCR has about 7,000 nationwide and expects to have 10,000 by the end of 2010. Industry research anticipates 30 percent of movie rentals to take place at kiosks this year, he said.
He said NCR intends to keep using the Blockbuster name.
"Blockbuster really has been a hallmark brand for home entertainment for the last 20 years," he said.
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