Tag Archive for: big chain store closures

Bed_Bath_Beyond_Store_Interior-Photo Courtesy Of PR Newswire 770x320

Bed Bath & Beyond’s recent bankruptcy filing is not expected to impact retail landlords very much, as many have lined up tenants long before Bed Bath & Beyond actually filed its paperwork.

But it will have ripple effects elsewhere, including in some industrial markets, according to CoStar Group’s May 2023 real estate report.

Bed Bath & Beyond leased 6.1 million square feet of distribution centers throughout the country, most of which in large, modern centers built after 2005. About half already are marketed for lease on CoStar.

CoStar believes that some of those distribution locations will fare better than others and attract new tenants. The reason is that there are only three other existing or under construction distribution centers with space measuring 500,000 square feet or greater, also built after 2000 and within a one-hour drive of Bed Bath & Beyond’s largest Las Vegas distribution center. In contrast, its center within the Dallas-Fort Worth metro market has almost 50 such available distribution spaces within a one-hour drive.

At the same time, several other big chains such as T.J. Maxx, HomeGoods and Ross Stores have grabbed up some of Bed Bath & Beyond’s stores, which could necessitate their demand for more distribution centers down the road.

Meanwhile, while Bed Bath & Beyond’s store closures won’t have that much of an impact on landlords, that is not to say that retail itself hasn’t experienced some setbacks in the first quarter, according to CoStar.

In the first quarter, leasing volume for the retail sector slowed by 2% when comparing quarters and 26% in comparing year to year activity, due to the uncertain economy and absence of available spaces. Altogether, retail tenants occupied 13.2 million square feet on a net basis, which accounted for move outs. This represented the slowest level since 2020 but the ninth consecutive quarters of net demand growth.

Retail property sales also fell—by 40% quarter to quarter and almost 50% year over year due to higher interest rates affecting deal flow adversely. Falling prices have not declined enough to encourage investors to step in.

 

Source: GlobeSt.