Circuit City Collapse Could Drive Down Rents, Hurt Market
The demise of Circuit City could have a not-so-obvious effect on the economy- a drop in demand for shopping and strip mall space, leading to lower rents, but possibly even more lost value for mortgage-backed securities.
According to Reuters, landlords nationwide are among the bankrupt company's many creditors, and the empty space created by shuttered Circuit City stores will be hard to fill without dropping rents. In addition, more than half of shopping centers with Circuit City locations have mortgages that are in commercial mortgage-backed securities. The death of the chain will lead to a large amount of lost value.
Circuit City announced last week that it would liquidate all remaining stores, after failing to be acquired by a bankruptcy court's deadline.