Check out Circuit City tomorrow…
“The nation’s second-biggest consumer electronics retailer says it will lay off more than 30,000 workers and begin close-out sales on Saturday.”
My guess is that, in this economy, people will be able to get as good as, if not better, deals elsewhere Circuit City begins closeouts.
They closed all the metro Atlanta stores about 2-3 weeks ago.
I went in to look at “close out” stuff and it was slim pickens.
So what happens to all these shopping centers (strip malls, shopping malls) where the anchor stores are closing and no longer paying rent? We’ve got an area near us where we lost the Linens and Things and now Circuit City. The whole area is less than 4 years old and they’ve lost 2 anchor stores. Or do those stores own the buildings?
They go bankrupt just like everyone else http://www.nytimes.com/2008/10/15/realestate/15general.html
Hard to pay the mortgage when you don’t have any renters.
~Matt
Yep, they say the commercial real estate meltdown will be worse than the housing melt down. This whole mess is gonna get a LOT worse before it gets better.
It’s a house of cards and we’ve only knocked down the top layers.
~Matt
“the commercial real estate meltdown will be worse than the housing melt down”
Always is. I owned commercial real estate in the early 90’s and got burnt during that recession.
Oddly enough they’ve been saying commercial real estate has been holding it’s own. My guess is because it hasn’t hit the wall yet.
Residential broke because of crappy loans, which started a recession. The recession will take out the commercial real estate.
~Matt
While I don’t disagree with the general sentiment - I don’t think we can read too much into CC closing. The company has been failing, mostly due to some really bad management decisions, for at least three years. Perhaps this economic downturn pushed potential buyers away and finalized their insolvency, but this has been a long time coming. They filed Chapter 11 back in November. They have been in negotiations with potential buyers for at least two years I know of, and nobody would touch them back in 07, let alone now.
They have been managed into non-existence. At one time CC was the second largest appliance dealer in the US. What did they do with that - sell it off. They also created Carmax - which has been a very strong business line. What did they do with that? Sell it off. Interestingly, the guy that came in and created Carmax under CC left and went on to found Crocs - I would be following that boy around seeing what his next venture is.
They did a terrible job of brand recognition compared to BB. Just compare Geek squad and Firedog (does anyone even know what firedog is? Popular television has even ripped off Geek Squad, it is that recognizable as a brand.
Just saying I doubt there was a whole lot that was going to resurrect these guys regardless of our economic times.
Now if BB had folded …
While I don’t disagree with the general sentiment - I don’t think we can read too much into CC closing.
I was speaking to the impending commercial real estate collapse. We are in a recession caused by the residence real estate. The recession will take out more than a few companies operating on tight credit and lowered sales and profits. That means a bunch of unrented commerical real estate and then that will add to the pressure on the general real estate market, mortgage and credit problems.
As someone else posted we have quite a few “Strip malls” with a WHOLE bunch of empty spots and the industrial areas around here are starting to look like ghost towns. LOTS of empty buildings and more on a near daily basis.
~Matt
sorry - wasn’t entirely sure your context was that specific. It will be interesting to see what happens in our town -CC was closed back out in November here - anchor store to a mall.
I saw that earlier. Here is the thing that kinda sucks about the whole “close-out” deal. Circuit City received permission to sell inventory to competitors. So, most of the inventory will be purchased by Best Buy, with Walmart probably picking up most of the rest.
Those two stores will buy that inventory for 30-40 cents on the dollar. What will they then charge for the items? Retail.
Think about it. You have, say 500 iPods. You buy 100 more from Circuit City for 35 cents on the dollar. Are you going to sell those 100 for less than what you have other 500 priced? Heeeeeeeelllllllll no! So, Best Buy makes a killing. Nice.
I worry about the long-term impact of this. Who competes with Best Buy? No one. That sucks for the consumer.
It really is too bad b/c I like Circuit City MUCH more than Best Buy.
Yep, they say the commercial real estate meltdown will be worse than the housing melt down. This whole mess is gonna get a LOT worse before it gets better.
I knew things were getting bad here in '07 when the Wendy’s closed their doors. Then Hollywood Video followed in '08. Yeah, you can get a great deal on commercial property today and probably a better deal next month.
We have a stripmall that lost a Linen n’Things in the fall and the Circuit City is now apparently going toes up. It will be interesting to see what also falls. There is a movie theater and QFC so all hope is not lost there but some of the smaller stores will feel the impact.
The CC website is closed down, basically says come back later. I wonder if it will ever be back up again.
Here is the website update: