PHOENIX — When Sears, Toys “R” Us and Circuit City filed for bankruptcy in recent years, it was an opportunity for other retailers to move into their old storefronts.
Now, retailers are pouncing on empty Bed Bath & Beyond stores including several here in the Valley.
“Some of our best stores were created from carved-up Kmart or Sears locations,” Burlington Stores CEO Michael O’Sullivan said earlier this year. Burlington has taken over 44 former Bed Bath & Beyond spaces across the United States.
This is the first holiday shopping season in more than 50 years without physical Bed Bath & Beyond stores after the chain went out of business earlier this year and closed its final 360 stores and also 120 buybuy BABYs in one of the largest retail bankruptcies in years. (Overstock.com bought Bed Bed & Beyond’s brand out of bankruptcy and has relaunched it online, complete with the 20% coupons.)
But hundreds of empty Bed Bath & Beyond stores auctioned off as part of the bankruptcy proceedings are turning out to be coveted real estate for retailers and other companies seeking to expand.
Burlington, Michaels, Barnes & Noble, Ollie’s Bargain Outlet, Macy’s, HomeGoods and other chains have replaced old Bed Bath & Beyond stores. Indoor pickleball courts, trampoline parks and bowling alleys have also filled up the vacancies.
Former Bed Bath & Beyond stores are hot, even as retail spending slows a bit, because there aren’t too many new big boxes to move into. There hasn’t been much new retail space built since the 2008 financial crisis, and the rise of online shopping, retail and real estate experts say, all put a damper on building.
The result is that retail vacancy rates are at historic lows.
The majority of Bed Bath & Beyond’s stores are in the suburbs of mid-size and large cities, and are under 50,000 square feet. These are appealing qualities for retailers as some companies favor smaller spaces, instead of mega stores, to save on rent and labor and as shoppers buy more online. Macy’s, for example, is opening its smaller “Market by Macy’s” versions at old Bed Bath & Beyond stores.
While headlines about the “retail apocalypse” have grabbed attention over the past decade, brick-and-mortar stores are still important to many shoppers.
Store growth has been most pronounced in the discount segment of retail as shoppers on tight budgets search for low prices. Other companies are using their stores to ship online orders to customers, which can be more efficient than delivering orders from warehouses. Even brands that started online, such as Warby Parker, have opened stores.
Bed Bath & Beyond spaces have been grabbed up swiftly at rents of up to 50% what Bed Bath & Beyond was paying, according to commercial real estate investment firm CBRE. Landlords are taking advantage of the vacancies, with some dividing former Bed Bath spaces into smaller sizes, said Brandon Isner, CBRE’s head of retail research for the Americas.
“There is little to no concern that any of the spaces will go vacant for long,” he said.
ABC15 has reached out to CBRE Group Inc. for insight on Bed Bath & Beyond Vacancies in the Valley.
Kimco Realty, a real estate owner with 26 former Bed Bath & Beyond leases, said that new leases were 38% higher than Bed Bath & Beyond rents. Kimco has leased 14 spaces to companies like Burlington and HomeGoods and is in discussions with TJ Maxx, Ulta, REI and others for the remaining 14 stores.
“We have a very strong real estate team that has a lot of experience dealing with retail bankruptcies,” Burlington CEO Michael O’Sullivan said. “Many of our most successful and productive stores today were once upon a time Circuit City, Toys R Us, Sports Authority, Linens ’N Things.”
REINVENTING LARGE VACANT SPACES IN THE VALLEY
- Tempe is home to the first U.S. Picklemall location.
- The pickleball facility occupies the former At Home store at Arizona Mills; it’s a 104,000-square-foot business that’s now home to more than a dozen pickleball courts. Read more about this pickleball tenant right here.
- The former Sears at Desert Sky Mall near 75th Avenue and Thomas Road in Phoenix will be transformed into a multi-level entertainment venue.
- The space was bought for about $7.1 million and “anywhere from 3 to 5 million dollars” will be used for the redevelopment. Read more about the multi-million dollar purchase that hopes to boost the West Valley community, right here.
- Scheels, a sporting goods store with entertainment, opened its first Arizona location in September. The new retail shop located at the Chandler Fashion Center took over the former Nordstrom that closed back in 2020.
- Here’s an inside look of the two-floor location.
@abc15arizona Scheels is set to open its first Arizona location this month, but before they open, ABC15’s Nicole Gutierrez takes us inside the massive two-story sporting goods store with entertainment! #Scheels #Chandler #FamilyFun #Shopping #NewBusiness #SneakPeek #ABC15 #ThingsToDo ♬ original sound - ABC15Arizona
The video in the player above showcases the best things to do in the Valley this November. Read more about it, right here.
