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LANDLORDS COOL TO SOME RETAIL SECTORS

PHOENIX — Landlords are putting the brakes on tenant improvement allowances for toy, athletic shoe and video rental stores because of the volatile state of those retail sectors, executives told attendees at the ICSC Conference on Open-Air Centers in February.

Bankruptcies and consolidation will lead to a lot of closed stores, and landlords don’t want to get burned, said Mary Lou Fiala, president of Jacksonville, Fla.-based Regency Centers Corp.

Video chains in particular are still welcome to lease space in her company’s shopping centers, Fiala said, but “we won’t spend our dollars — no more [tenant improvement allowances].”

Regency is particularly concerned about video rental stores, given the ongoing fight between Movie Gallery and Blockbuster to buy the Hollywood Entertainment chain, said Fiala. “That’s a lot of real estate,” she said. “It’s going to take a lot of money to divide up those 6,000-to-8,000-square-foot stores. It’s only the beginning of the cycle, and that’s what worries me most.”

Landlords learned a tough lesson following the recent similar shakeout in the drugstore category, she said, when empty drugstores had to be broken up to accommodate smaller tenants. More than 1,000 shopping center professionals attended the event.

— BB