How Circuit City's Bankruptcy Affects the Real Estate Market

I'm sure you have all heard by now, but Circuit City filed for Chapter 11 bankruptcy protection back in November 2008. However, the other day, the final nail in the coffin was when Circuit City announced that they would close all 567 stores in the US. 30,000+ Circuit City employees lost their jobs that day, and many of them are just hoping that they can get some money before the stores officially close. Also lining up to get money are the landlords who rent Circuit City's store spaces. These landlords are probably a little nervous as a major store has closed, leaving their rent spaces open and no rent revenue streaming in. Furthermore, I bet they are also lining up to get the rent that they are owed before Circuit City is completely out of cash. But here's where it gets bad for the real estate industry - with the retail industry in peril right now and holiday sales dropping for the first time in nearly 15 years, many stores are probably going to start talks of renegotiating their leases. And they will probably want their rents lowered. Faced with more and more empty lease spaces, the landlords will most likely have to go along with this demand. Rents will fall. Real estate revenue will be lost. Welcome to my life. Dealing with the new economy is not fun for us retailers either.