National closures force Miami Borders to revisit lease terms
By Yudislaidy Fernandez
Although Borders' Miami-Dade bookstores dodged the 16 store closings the national retailer has ordered in Florida, plans are to renegotiate those stores' lease terms to keep them open.
The struggling specialty retailer of books and other educational and entertainment items recently filed for Chapter 11 bankruptcy to restructure its operations and debt.
As part of this process, Borders Group announced 200 store closings in the US last month.
Its current Dade locations in Coral Gables, Doral and Miami won't be affected — for now.
Michigan-headquartered Borders has retained DJM Realty, a Gordon Brothers Group Co., to manage the disposition of about 200 underperforming stores, ranging from 12,895 to 42,770 square feet, throughout the US, including California, New York, Texas and Massachusetts.
Borders has stores in Miami-Dade at 358 San Lorenzo Ave. inside the upscale shopping center Village of Merrick Park, at 9205 S Dixie Hwy. and at the main entrance of Dolphin Mall in Doral at 11401 NW 12th St. A fourth Borders is inside Miami International Airport's Central Terminal, on the second floor.
"Now we are in the middle of negotiating with the landlords for all the stores to achieve rent concessions that could prevent future closings," said Andy Graiser, co-president of New York-based DJM Realty. "We are working to save other stores from closing. Therefore, we are in the process of having discussions with all these landlords to achieve the right rent level."
DJM Realty's bankruptcy client roster has included movie rental retailer Blockbuster, supermarket chain Winn-Dixie and home retailer Linens 'N Things.
Mr. Graiser also warned that a second round of closings is planned that targets another 75 stores but said he didn't know yet if it would include any Miami-Dade locations.
After the first round of closings, stores also remain open in Florida cities such as Tallahassee, St. Petersburg, Panama City Beach and Key West.
But some Borders stores are closing in Fort Lauderdale, Gainesville, Tampa, Brandon, Clearwater, Fort Myers and Naples.
Jeremy Larkin, president of commercial realty firm NAI Miami, said the big issue with Borders is the increasing competition.
For example, he cited Amazon.com, a Web site where consumers can buy books online, and its signature e-book reader device, the Kindle.
The added competition reduces the need for as many bookstores with as much square footage, Mr. Larkin explained.
The reason Miami-Dade stores escaped the closings, he said, is that the local retail market is performing overall better than others around the state.
"Miami was never overbuilt in retail," Mr. Larkin said. "Even in the height of the market, it was underserved in the amount of square footage of retail needed per person."
Rent concessions, he said, depend on the case the retail tenant presents to the landlord, because many times they don't want to risk losing a national retailer.
But because in a challenging commercial market many national tenants have been going back to their landlords to get a rent break, Mr. Larkin said his firm generally asks for the store sales for the past 10 years and reviews its Form 10-K, an annual performance report that public companies file with the US Securities and Exchange Commission, to better analyze each case.
As with all retailers in Chapter 11, Mr. Graiser said rent negotiations are never easy but are an opportunity to make a company better and stronger.
"We have lots of stakeholders that have to help these companies," he said. "The banks, the vendors, the landlords and also the employees, everybody has a stake here."
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