Toys R Us epitomizes the larger story of the past 20 years of North American consumers buying cheap goods largely on credit, largely produced in Asia, and financialization which attracted indiscriminate investor capital to enable rapid, mindless expansion far beyond what could reasonably be sustained. Then throw in private equity pirates like Mitt Romney’s Bain Capital who added even more debt to extract riches for themselves as the company drowns and employees and landlords are left in the lurch.
REIT stocks have also taken a beating on news of more empty retail space coming on market. More of this is likely to come. See: Toys R Us closures will leave hundreds of vacant stores on the market with few obvious replacements
What to do with the growing acres of superfluous retail space is a question of our time. Urban vertical farms and passive energy collection sites, community and recycling centers, are all productive ideas. Other buildings will be revamped into smaller spaces and some will need to be demolished. After the debt rush…this is our new normal.
This video of the rise and fall of Toys R Us is an interesting review of this history. Here is a direct video link.
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