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Bed Bath & Beyond’s Spillover Effects On Industrial

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.

Amazon Likely To Reduce Warehouse Space In South Florida Amid E-Commerce Slowdown

Paris, France - December 15, 2016: Amazon Prime Parcel Package. Amazon, is an American electronic commerce and cloud computing company,based in Seattle, Washington. Started as an online bookstore, Amazon is become the most importrant retailer in the United States by market capitalization

Amazon.com Inc. is expected to scale back its warehouse holdings nationally, including in Broward County.

At a June 8 public meeting, John Biggie, chairman of the Coral Springs Economic Development Advisory Committee and principal of JBI Development, said the Seattle-based e-commerce giant has “nixed” plans to move into 225,000 square feet within the Commerce Park of Coral Springs, at 4000 N.W. 126th Ave. The facility was slated to hire 200 people, according to previous announcements from Amazon.

Yuri Quispe, a broker with JLL and a member of the committee, said Amazon will also pull out out of a lease deal that it signed 2.5 years ago at a couple warehouse facilities near Sample Road and the Florida Turnpike.

In May, it was widely reported that Amazon executives said the company was losing billions of dollars due to fewer e-commerce sales and an overabundance of warehouses. As a result, the company planned to shrink its national industrial footprint.

Within South Florida, Amazon controls 8.7 million square feet of distribution space. Of that amount, about 2.3 million square feet has yet to be occupied, according to figures from CoStar Group.

Aside from Commerce Park, a source said Amazon has yet to fill an 823,000-square-foot facility at 4600 N. Hiatus Road in Sunrise, a 216,000-square-foot facility at 3750 Palm Drive in Homestead, and 1 million square feet at 13200 S.W. 272nd St. in unincorporated Miami-Dade that it purchased in 2020.

Keith Graves, senior VP of Berger Commercial, said that in the “big scheme of things,” Amazon will have a minimal impact in this industrial market, which has more than 45 million square feet of inventory.

“We are in the single digit vacancy rates. It’s not going to have a dramatic effect,” Grave said.

Nationally, the industrial market is shattering records. However, Quispe and Biggie warned that rough times may be ahead for Coral Springs’ industrial sector.

“We are starting to hear key indicators of leasing activity drying out and demand slowing, of not enough money to put a down payment,” Quispe said during the meeting. “All these ingredients are adding up … and if we are not proactive … when it hits it is going to be very bad.”

Biggie added: “The market has changed dramatically in the past 60 days.”

The 430,000-square-foot Commerce Center of Coral Springs was built in 2018 by Pennsylvania-based EQT Exeter. Exeter paid $14.88 million for the site a year prior. EQT Exeter sold Commerce Center to an unknown buyer in late 2021 as part of a $127.8 million deal. EQT Exeter still manages the site.

 

Source: SFBJ