The closure of all of Borders’ 399 bookstores nationwide — including 18 in Maryland — is not only a dramatic illustration of the changing publishing industry, experts said Tuesday, but also reveals the delicate relationship between large companies facing industry-specific problems and the commercial real estate market.
“It’s the same thing we saw with Blockbuster,” said Bill Holzman, the vice president of retail leasing at Baltimore-based St. John Properties Inc., which owns and has developed more than 14 million square feet of commercial, office, retail and warehouse space in Maryland and four other states. “It became too easy, cost effective and too common to get movies, books, whatever, via the Internet, Kindles, TiVo.
“Some people still like to go to the bookstore, but if you take away that much of the consumer market, there isn’t room for two major retailers anymore,” he added, referring to Borders’ top competitor, Barnes and Noble.
Borders closed 226 locations after filing for bankruptcy in February and had been searching for a company to step in and take control of its assets. That restructuring was “part of an ongoing process where [Borders] explored a number of different avenues,” said Public Relations Manager Mary Davis.
But none of the avenues panned out.
Borders announced Monday that it will submit a previously announced liquidation proposal from Hilco and Gordon Brothers to the bankruptcy court at a hearing Thursday. If approved, the company will launch closing sales as early as Friday in some stores and expects to conclude the process by September.
Leases too expensive
The sluggish economy might make it especially tough for some tenants to pay high rents and can discourage consumer spending, but according to some experts, the recession isn’t the primary culprit behind Borders’ bankruptcy.
Holzman said though he hasn’t worked on a deal with Borders, he doubts their troubles were just the result of too-expensive leases.
“They were a national tenant, and with the number of stores and the size of their stores, they had a lot of leverage with the deals that they made,” Holzman said.
For Borders and other brick-and-mortar booksellers, it’s tough to stay afloat amidst competition from online retailers, and several people browsing the shelves Tuesday in the Borders at the Columbia Crossing shopping center said the Internet has recently stolen much of their business.
As the industry struggles to keep up with evolving consumer tastes and incorporate new technology, those products end up reducing demand for actual printed material, experts said.
E-readers are the latest development to take the literary world by storm. The electronic tablets connect users to thousands of titles, often come equipped with wireless Internet and continue to win more people over as companies release improved models.
Yet while booksellers woo tech-savvy shoppers with new products, they sometimes push more traditional customers away. Harlan Krissoff from Columbia, for example, said he tried the Amazon Kindle and “wasn’t impressed.”
“I like the idea of turning pages manually,” he said while flipping through a magazine at the café inside Borders. “Of sitting back, bending the cover on a book — especially a new book — and smelling it.”
Krissoff said he visits that store at least once a week, sometimes walking out with a purchase but always settling down to enjoy a drink. Hearing about the closure was “like losing an old friend,” he said.
‘More adventure’ in a bookstore
Several other shoppers expressed the same idea. For many, ordering books online just isn’t the same.
“With the Internet, you’re going to find a specific thing,” said Melissa Edens of Baltimore, who was shopping with three of her five children. “With a bookstore, the best thing about it is you can go in, look around, stumble upon something. There’s a little more adventure.”
But as Borders vacates commercial centers across the country, adventurous shoppers and property managers must look elsewhere to fill the void. When large businesses move out of their retail spaces, there are always larger consequences, Holzman said.
“Physically, there’s a bigger hole in the shopping center, and any of the smaller tenants that were relying on that tenant will feel some impact,” he said. “In most cases, Borders was more of a junior anchor tenant, usually in a much larger shopping center anchored by a Target, a movie theater, grocery store, something like that. So thankfully the effects won’t be as damaging.”
For the regulars who set up laptops in the café or make weekly family trips to the children’s section, however, the effects will be plenty noticeable.
“We’ll miss having it here,” Edens said. “You always think, ‘Oh, it’s going to be there, I can go in whenever I want.’”