Colorado Real Estate Journal - March 4, 2015
When RadioShack filed for bankruptcy last month, it made headlines. After all, the 94-year-old company is a household name and the Chapter 11 reorganization involves big bucks. RadioShack had $1.38 billion in debt, but only $1.2 billion in assets. And in the wake of the bankruptcy filing, RadioShack made headlines again when it said it would close 1,784 of its 4,485 stores in North America by March 31. However, the Colorado Real Estate Journal looked at a list of the planned closings and found that only 20 stores are scheduled to be closed in Colorado. In other words, in Colorado, the stores on the chopping block represent only 1.12 percent of the stores scheduled to shut their doors. Together, the 20 stories, some as far away as Grand Junction and Pueblo, have less than 50,000 square feet. One way to look at it: Those 20 stores, combined, are smaller than the Whole Foods to be built in the 17W apartment community in downtown Denver. “That is a great way to put it into perspective,” said Blake Larson, a broker with the Legend Retail Group. Larson said the pending RadioShack closings will have little impact on the Denver area’s strong retail market. “I think the first round of closings will not have much of an impact,” Larson said. “There is enough positive momentum in the last year or two that these RadioShack closings will not be an issue.” That is not to say another RadioShack shoe will not drop. “The big question that a lot of people are asking is what happens next?” There has been a buzz in real estate circles that companies such as Sprint, AT&T and even Amazon might take over some RadioShack stores. Sprint already has agreed to take over 1,750 RadioShack stores. They will be combined into a Sprint/RadioShack retailer. However, even if more stores close, it could be good news for landlords. That is because, in some cases, lease agreements with RadioShack preclude leases to be signed with wireless carriers. In other words, if a RadioShack is in the center, the landlord can’t ink a deal with Verizon or AT&T. That would not be the case if a cellular company predated the RadioShack. However, RadioShack has been around for such a long time, it was there before smartphones were even part of our vocabulary, predating many of its newer, more profitable rivals, he noted. Addresses and the size of RadioShack stores to be closed in Colorado, according to court documents, include: • 5890 W. 44th Ave., Wheat Ridge (court documents shows mailing address of Denver), 5,040 sf.; • 7450 W. 52nd Ave., Arvada, 2,740 sf; • 7507 W. 80th Ave., Arvada, 2,100 sf; • 7475 W. Colfax Ave., Lakewood, 2,400 sf.; • 10705 W. Colfax Ave., Lakewood, 2,400 sf.; • 14200 E. Alameda Ave., Aurora, 2,209 sf; • 6554 S. Parker Road, Aurora, 2,025 sf; • 1265 Sgt. Tom Styles Drive, Highlands Ranch, 2,236 sf.; • 4949 S. Yosemite Road, Greenwood Village, 2,100 sf; • 3702 Riverpoint Parkway, Sheridan, 1,891 sf; • 7243 Federal Blvd., Westminster, 2,200 sf; • 1710 Briargate Blvd., Colorado Springs, 2,136 sf; • 225 Ken Pratt Blvd., Longmont, 2,016 sf; • 1670 E. Cheyenne Mountain Blvd., Colorado Springs, 2,100 sf; and • 3285 Dillon St., Pueblo, 3,650 sf; “Some of these are in some pretty decent centers,” Larson said. “I would say it is a mixed bag,” with some in more Class B and C locations, he said. Previous closings or downsizing chains have had a bigger impact on the retail landscape than RadioShack, he said. One reason is that often they closed their doors at tough times during the economy, so there wasn’t as much demand for space as there is today, he said. “When you think back to some of these bigger box guys, like Circuit City, there weren’t as many active box tenants looking to fill those spaces,” Larson said. “So it took a bit longer to backfill them,” he said. Also, there are a lot of tenants that are interested in the small footprint of a RadioShack, he said. “Two thousand square feet is a very leasable size,” Larson said. “That should be an easier size to re-lease than the bigger Circuit City or Office Depot/OfficeMax stores,” he said. However, he said one recent case bucked that trend. “I think Blockbuster Video was a bit unique,” Larson said. “Personally, I think Blockbuster tended to have better retail sites than RadioShack,” Larson said. “I think Blockbuster typically had pretty prominent locations.” Susan Karsh, a retail broker with Newmark Grubb Knight Frank, agreed that Blockbuster stores tend to have had better locations than RadioShack stores. Blockbuster declared bankruptcy in 2010 and later was purchased by locally based Dish Network. “Blockbuster made more of an impact because they tended to be about 5,000 or 6,000 square feet, while RadioShacks tend to be around 2,100 square feet,” Karsh said. “Blockbuster stores tended to have sexier locations than RadioShacks,” she added. Like Larson, she doesn’t think RadioShack closing stores will have much of an impact on the Denver-area retail market. “I don’t think it is going to have much of an impact at all,” Karsh said. Also, its demise is not unexpected, she said. “It is not a surprise at all,” Karsh said. “Look, RadioShack is a 95-yearold company. If you asked any company starting out today and you could promise it a life of 50 years - half of RadioShack’s – the company would be thrilled. Everybody would take it.” RadioShack, she said, simply faced too much competition. “RadioShack had a great run,” Karsh said. “But they are just competing against too many bigger brick-and-mortar retailers, as well as everyone on the Internet, like Amazon.” For the outlier RadioShacks that aren’t in established malls, it might be a little difficult to backfill them, she said. “If you are looking to fill a space that is 2,500 square feet or less, and it's not fast food, it’s not a slam dunk to find a tenant,” Karsh said. “A lot of these little neighborhood centers where you find a RadioShack already have a liquor store and a nail salon and a cleaners,” Karsh said.