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BOSTON-Retailers can see opportunity in the future, as prime space becomes available at lower rates, but that is only if they survive the current environment. As Collier International’s “Streets of Gold” list sees it, retail is a rough neighborhood right now.

A “severe reduction in retail spending” is “leaving store space vacant,” as the same-store sales levels will come in “well below” previous years, says the report. A contraction of the retail sector is imminent as the falling dollar impacts what now appears to be an over-building that the sector has experienced over the last few years.

The most notable, and perhaps obvious, prediction of the report is that “retailers closed more stores that they opened last year” and will continue to do so in 2009. This focuses specifically on underperforming retailers, but sees the possibility that these downward trends could spread to “well-run retailers due to plunging sales,” with more than a few markets pushing over the 12% vacancy mark.

The areas with the lowest vacancy are, not coincidentally, those that slowed development. This points as well to the stability in neighborhood and community shopping centers.

“To generalize, the number one issue is supply,” says Ross Moore, EVP market & economic research for Colliers. “As a rule it’s more difficult to over-build in an urban area, whereas we’ve seen more development occurring in suburban areas because there’s more land and it’s just easier to develop.”

The problem, of course, then becomes over-supply and as retailers close, there is no new product to move into the existing space. The stability sits in the urban areas currently, as Moore explains to, “It just creates a more stable environment, so if you’re looking at San Fransico or Boston or Chicago, any of those cities, you’re not going to build a [one]-million-square-foot mall in any of those downtown areas. But you could build one million square feet in Phoenix.”

Regional malls and power centers have taken a beating as anchor and junior anchor space users are collapsing, as the report notes, Mervyn’s, Goody’s and Circuit City as prime examples. Part of this trend is seen in the General Growth Properties bankruptcy filing, which stands as a parable for landlords. Colliers makes a point to say that “large debt load coupled with inability to refinance equals massive worries for landlords.”

Meanwhile, the strength of anchors in neighborhood and community shopping centers lend themselves to be the most stable of retail format. “If you look at the tenant profile, almost by definition [the local center] is anchored by a grocery store,” Moore tells “and if it’s not a grocery store, it’ll almost always be a drug store–and those are somewhat recession proof. [In] community centers, often there can be a grocery store anchor, but it’s more service oriented, so there’s less emphasis on discretionary spending.”

With developers putting projects on hold and retail REIT’s facing a daunting environment, oddly restaurants’ numbers are looking alright. “Food services and drinking places, if you want to do a month over month,” Moore explains. “[In] April, [sales are] up 1.1% and then if you think it was just the month of April, year to date, it’s up 1.7%.” Moore does note that those numbers do not delineate between a McDonald’s or a five-star restaurant, which tends to skew the results if the ubiquitous fast food places are doing better.

There has been a trend of opportunism, where retailers that have the money to invest aregrabbing prime locations for lower prices, a plan expressed by Crown Acquisitions in their play for major Filene’s locations. The point being, if those companies have the money, which is not true of many at this point in the game, since a lot of retailers do not have the working capital to make moves.

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