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TRC Blog

June 16 , 2011

Be Careful.

Be Careful.

We all know that most of the best spaces have been absorbed and there is little to no new product being developed which leads many to think the supply and demand dynamic is going to shift the balance of power back to the landlords....and in many cases, it will. Weak retailers going to landlords for rent reductions are going to find those landlords willing to reduce their rent to zero and terminate their lease so they can release the space to a stronger operator. At the same time, there are no set rules. And retailers, like most businesses have learned to operate more efficiently the last couple of years. That combined with reduced competition, is going to enable certain retailers to let the leases on redundant locations expire, confident they will pick up those sales at nearby stores.
 
So the point is, real estate is an inefficient business. There are no rules, and the dynamics of what makes for successful retail operations are extensive. No one variable including supply of space is going to change that.
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