Bookstores and video stores have quickly disappeared, and other brick and mortar stores are losing sales to online shopping, but there is reason for some optimism on the retail front as the industry has been showing remarkable resilience in recent weeks.
Reg Kobzi, a CB Richard Ellis senior vice president, said the retail market in San Diego is not only better than he has seen since 2007, it is significantly better than almost every other part of the country save for Washington, D.C.
"We're busy as all get out. We're looking much better on the investment and the leasing side. We're back to 94 or 95 percent occupancy," Kobzi said.
Depending on the survey, the retail occupancy had been as low as 92 percent (8 percent vacancy) during the depths of the recession, but that was significantly better than many other parts of the United States where the vacancies were well into the double digits.
"We're way ahead of the curve compared to the rest of the country," Kobzi added. "The pendulum is quickly swinging back to being a landlord's market."
Kobzi said it helps that the spate of large tenant bankruptcies appears to be over.
"Now rents are rising and there's more product on the market, and were seeing multiple offers on deals," Kobzi continued.
If Kobzi has any concern, it is that still-high gasoline prices could keep many prospective buyers out of the centers.
In the meantime, it hasn't been the easiest of times for neither retailers nor landlords. Most Borders bookstores are now closed, video rental stores are practically gone and soft goods retailers such as Mervyn's and Linens 'N Things are also no more. The news isn't all bad, however.
Landlords who are fortunate to have their properties in well-located shopping centers may hardly miss a beat. While Linen's, Mervyn's and Circuit City are gone now, in Carmel Mountain Ranch, Linens was replaced by Best Buy and Circuit City was replaced by a Sprouts Market. Several former Mervyn's locations have also been transformed into Kohl's here and elsewhere.
The 78,700-square-foot former Mervyn's in the Carmel Mountain Plaza Shopping Center has been vacant for the past two years, but that property was under a separate ownership until American Assets, which owns the rest of the center, bought that property in December.
"There has been solid interest for the entire space," said John Still, a Flocke & Avoyer senior vice president handling the listing, adding that it isn't immediately clear whether one or two tenants will occupy the building.
Across Rancho Carmel Drive , the former roughly 30,000-square-foot Border's bookstore in the Courtyard at Carmel Mountain Ranch is dark, but Kobzi said he understands there have been multiple offers for the space that backs up to Interstate 15.
"They aren't building any more freeways," Kobzi said. When asked if that Border's space could be carved up, Kobzi said he is nearly certain a single tenant will take the lease.
The Rancho Penasquitos Towne Center shopping center, anchored by a Vons supermarket and a Rite-Aid, has had similar turnover. Ace Hardware, which had been a fixture at the center for a decade or longer, closed within the past few months, sending shoppers to either the Home Depot in Carmel Mountain Ranch or the Home Depot in Mira Mesa for their hardware needs. Area residents do now have a Time Warner store for bill paying and other services, however.
The Rancho Penasquitos center lost a Blockbuster Video store not long after a video dispensing machine was placed less than 200 feet away. The old space has now been claimed by Union Bank, which is expanding from a small corner space within the same center.
Restaurants over the years have also come and gone. One space in Rancho Penasquitos Town Center has had Japanese, Greek and Indian food. A restaurant known as Jose O'Reilly's in that center has been converted to Café 56, while Bucky's of Boston, an ice cream seller in the center for 15 years, has been dark for two years after managing to thrive next to a yogurt shop for half a generation.
The churning has also gone on at a Stater Brothers-anchored center known as Plaza Rancho Penasquitos in another part of the community. At that center, a Happy Tiger Chinese takeout restaurant that, like Bucky's, had thrived for more than 10 years at its location, closed and became a Japanese barbecue before that, too failed. The space became a cleaners after that.
Perhaps the best news in that center is that the shuttered Hollywood Video space is preparing to be reborn as a Discount Tire. In another portion of the same center across Carmel Mountain Road, a BadAss Coffee now inhabits a former bank location. Bruce Schiff of Cassidy Turney BRE Commercial is handling the leasing in that center.
So is the market improving as much as Kobzi suggests?
"It kind of depends on the property," said Bill Thaxton, who like Still, is a Flocke & Avoyer senior vice president.
Thaxton said what he has noticed most of all is there has been a flight to quality among tenants and prospective buyers of retail property.
"There's a huge gap between properties that are very well located and those that aren't," Thaxton said.
"Buyers need to find ways to minimize their risks."