Even comparing within a state makes no sense Candyman1. It can be as specific as neighborhood or block. Two retail locations can have substantially different rent profiles and be only blocks away from each other. There isn't much logic in saying the supply in Florida will triple when a store services a few square miles.
Interesting ... so why did redevelopment deals and terms struggle in CA when Mervyn's took Chapter 7 with about 120 stores. I guess those stores don't cover a few square miles. =) I know someone that was involved in that situation. Yes, the store covers only a local area, but the tenants don't. And the tenants now will have three times the choices to pick where they will open their new stores. It is much easier to negotiate with landlords when you have 4 knocking on your door with a great location each than when you have one. And the landlords will all call on the same potential tenants at the same time.
Suppose you're correct Candyman, yes there will be more supply a la Mervyns, and rental rates should come down. SRG, as we have seen, should do just fine because 1) they can sit on properties acquired at garage sale prices (EV/sqft of $120/sq ft) and release far below what other REITs avg sq ft rental is for similar quality property for a nice profit and multiple of historical Sears rents => competitive advantage.
We have seen this over last several years with REIs, Olive Gardens, Steakhouses moving from literally blocks down the street to fill in the new supply at SRG.
I'd argue you're right, but I don't draw same conclusion as you. As Berkowitz said a couple of years back before he threw in the towel on all things SRG, "anyway you slice it, SRG is cheap" at around 40-something a share.
And with the 5 yr loan from BRK, to me SRG remains quite a lopsided positive bet, and nice risk adjusted returns.
edit: also getting the whole boxes back means the JVs can finally be greenlit with Macerich, Simon, and rest of GGP.
