Mervyns' Effect on Mall Owners

Here's a good analysis from the Los Angeles Times on the effect the troubles at Mervyns will have for mall owners in California.

And any potential closures would probably be felt in California, where Mervyns operates 129 of its 177 stores.

Retail vacancy rates were up in all eight major California markets tracked by Reis Inc. in this year's second quarter. The Inland Empire was the hardest-hit area in Southern California, with the vacancy rate rising to 7.2% from 5.2% in the same period last year.

The increase reflects the housing downturn, said John Husing, an Inland Empire-based economist.

From 2003 to 2005, as the housing market gathered steam, 80,000 people were migrating inland from the coast annually, and retailers were hot on their heels, Husing said.

Last year, as real estate turned, the migration slowed to 35,000. Many new buyers were forced to abandon their homes because they couldn't afford the payments.

"Retail doesn't recover until housing recovers, and housing isn't going to recover until you cut off the flow of foreclosures," Husing said. "And when is that going to recover? Nobody knows for sure."

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