DEB’S RETAIL DISH AND DEALS: RETAIL RE-USE

One of the great highlights of the ICSC meeting in Las Vegas in May was hearing just how optimistic the industry is, and how hungry for space physical retailers are. (See my feature story elsewhere in this issue.)

Debra Hazel

Debra Hazel Communications

North Las Vegas, NV

(201)618-5247

New construction was nearly non-existent in the last few years and totaled just 5.1 million square feet in the frst quarter of 2023, CBRE reported. Expanding retailers thus must turn to vacant spaces to fulfll their plans. And they’re doing so, rapidly. The U.S. retail availability rate dropped to 4.8% in the frst quarter of this year, down 50 basis points year-overyear, also according to CBRE, which observed that retailers absorbed more than 81 million square feet in 2022, the most since 2016.

So, right now it’s grab what space you can when you can, especially since the greatest shortage is in Class A malls. Open air is the answer, and some recent bankruptcies are helping the process.

The Bed Bath & Beyond (BBB) bankruptcy auction saw Burlington Stores take over 44 of the former’s 109 leases. It also picked up six more locations outside of the auction, spending $13.53 million for the lot. Michaels took on nine locations, Haverty took four, while various other companies (including Barnes & Noble) took stores, too. Macy’s continues to expand in open-air centers — it acquired a BBB lease, perhaps for its Bloomie’s concept — as well. Landlords were also active, taking back 37 leases to fll themselves.

HomeGoods, Ross Dress for Less, Aldi, Casey’s, Whole Foods, Five Below and more are looking for space. After spending years focusing on China and Russia, international brands such as Mango, Primark, Uniqlo and Zara are now looking to the U.S. for growth, especially as many closed their Russian locations after the invasion of Ukraine.

Ikea has announced major expansion plans for smaller format stores, dollar stores continue to grow, and Costco and Academy Sports are looking for locations, as is Goodwill. And stores can be subdivided into ftness facilities, medical offces and more. Restaurants are another possibility in the right spot.

Other retail leases are coming up for auction, including some subleases for Sprouts, as well as Tuesday Morning. And my beloved Christmas Tree Shops is now bringing 82 locations to market after announcing its liquidation.

Class B and lower enclosed malls still face challenges, to be sure, and undoubtedly some of their tenants are also looking at vacated spaces in open-air projects.

And there’s clearly consumer demand for physical stores. In May, I went to the grand opening of a Nordstrom Rack store about 20 minutes from my home. Just 10 minutes after the ribbon-cutting on a weekday, the store was packed.

Meanwhile, companies including TJ Maxx,

It will be interesting to see what takes the place of the Bed Bath and Beyond next door. And something will.