A closed Bed Bath & Beyond store in San Francisco, California, USA on Monday, April 24, 2023.
David Paul Morris | Bloomberg | Getty’s paintings
In shopping malls across the country A shower in bed and more the shops have “Closing Soon” signs.
For other retailers, it’d as well be “For Rent” signs.
The homeware retailer, which filed for bankruptcy on Sunday, is not going to only create opportunities for competitors to win recent customers and market share. Its closed stores will begin to take over land for retailers hungry for extra space.
Bed Bath will join the list other bankrupt firms corresponding to Kmart and Sears cleared space and made room for stores. Bed Bath has nearly 500 locations that might open – between its 360 namesake stores and 120 Buy Buy Baby locations – for other businesses to rent. It has already closed many places, closing 150 unprofitable shops of the identical name and shutting all 49 locations of the Harmon FaceValue cosmetics chain.
The corporate’s stores remain open and its website stays operational. The liquidation sale began this week.
But in accordance with real estate firms and retail industry watchers, the upcoming Bed Bath closures strike at just the fitting time. The retailer has locations in high-traffic suburban areas. Its stores will be easily scaled to their size – typically around 30,000 square feet, in accordance with industry analysts. Emptiness rates in shopping centers outside shopping centers are low and demand is high, especially as discounters expand and traditional players in shopping centers experiment with recent concepts.
The previous Bed Bath shops may very well be became many more retail spaces, said Deborah Weinswig, CEO of Coresight Research, a retail consultancy group. They will turn into doctor’s offices for CVS Or Walgreensas drugstore chains push into primary care or turn into grocery stores for growing chains like Aldi or Lidl, she said.
Some could also be split into locations for multiple businesses. Others could also be flooded by a single tenant.
The Bed Bath spaces are more able to move in than the Kmart and Sears locations because they have been higher maintained overall, while the higher-performing stores “just need a lightweight dusting,” she said.
“Previously, I might need been a bit of more concerned if we had undergone something like this, but I’m just not,” Weinswig said. “I’m not anxious at this point because there’s been such an enormous shift by way of demand for physical spaces.”
An appetite for space
Bed Bath & Beyond stores will hit the market because the space outside the mall is hot and shoppers are returning to the shops.
Poor retailer locations have thinned out through the effects of the Great Recession and again through the COVID-19 pandemic, said James Bohnaker, senior economist at Cushman & Wakefield. Now a mixture of stronger retailers are vying for space in similar strip malls, including dollar stores, discount retailers, direct-to-consumer players corresponding to Warby Parker and Casper and traditional retailers corresponding to Macy’s.
The emptiness rate in shopping centers fell to five.6% in the primary quarter of this yr, the bottom level since Cushman & Wakefield began tracking in 2007. Such locations, which frequently include a big grocery store and businesses corresponding to gyms and restaurants, have gained popularity resulting from their convenience and proximity to growing communities, recent neighborhoods and wealthier shoppers.
In line with Coresight Research, 2022 was a flagship yr for the retail real estate sector within the US as store openings surpassed closings for the primary time since 2016.
The corporate said major retailers opened about 2,500 net recent stores within the US in 2022.
Current 2023 US Store Opening Announcements
Since April, discounters have been leading this yr in announcing US store openings
Dollar General: 1,065 stores
Family Dollar (owned by Dollar Tree): 328 stores
Dollar Tree: 308 stores
Five below: 199 stores
JD Sports: 134 stores
TJX Corporations (including TJ Maxx, HomeGoods, Marshalls): 102 stores
Wawa: 100 stores
Burlington stores: 96 stores
Ross stores: 92 stores
Bath & Body Works: 92 stores
Tractor supply: 70 stores
Source: Coresight Research data
Industry watchers expect retailers to grow at an analogous pace this yr, at the same time as rates of interest rise and the economy becomes more volatile.
In line with Coresight’s Weinswig, there are several aspects driving demand for retail space: Retailers have extra money after the pandemic-induced spending frenzy. Corporations see brick-and-mortar stores as each billboards to advertise their brands and e-commerce achievement centers. Retailers are also adding technology to higher understand customer behavior as privacy changes by Google and Apple make it harder to trace them online. And hybrid work schedules mean shoppers visit stores throughout the day.
Discounters and discount players corresponding to General Dollar, Dollar tree AND TJX firms in accordance with Coresight, they’re leading the best way with big expansion plans. They might turn into potential tenants depending on how the previous Bed Bath spaces are cut and cubed.
Empty Bed Bath boxes may also be ideal spaces for gym chains corresponding to LA Fitness, Crunch and fitness planet, in addition to promotional banners corresponding to those from TJX HomeGoods and Marshalls, said Matthew Harding, CEO of Levin Management. The Latest Jersey-based company owns and manages over 100 properties in five states and Washington. Its properties include some former and current Bed Bath locations.
Even mall gamers can have a look. Foot cabinetfor instance, it closed around 187 US stores in 2022, greater than some other retailer, in accordance with Coresight. Footwear company president Mary Dillon, nonetheless, has spoken out about plans to open recent locations in strip malls. Macy’s it also opened stores outside of malls.
Consider it because the circle of retail life.
Kimco Real Estate, a property investment fund with 27 Bed Bath stores in its portfolio, said it already has single tenants able to fill most of those locations. Through a spokesperson, the corporate said it couldn’t disclose the names yet, but they include a mixture of discount, full-price, entertainment, grocery, furniture, and automotive or household appliances stores.
In a shopping mall within the Phoenix area, considered one of Kimco Bed Bath & Beyond’s former locations recently reopened as Burlington store.
In line with Levin Management, in a single mall in Edgewater, Latest Jersey, HomeGoods (owned by TJX Corporations, owner of TJ Maxx) is moving to the previous Bed Bath & Beyond.
In line with Rick Latella, Executive Director of Cushman & Wakefield’s Retail Appraisal Division, negotiations are underway at a location in Bergen County, Bergen, to convert a two-story Bed Bath & Beyond facility into multiple properties.
He said the owner is close to creating a take care of the vendor at a reduced price, Ross storesfor one floor. And on the second floor, potential tenants are REI, Petco and Barnes & Noble.
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