Bed Bath & Beyond store closures kick off land grab
In strip malls across the country, Bed Bath & Beyond stores have "Closing Soon" signs.
For other retailers, those may as well be "For Rent" signs.
The home goods retailer, which filed for bankruptcy Sunday, won't only create opportunities for competitors to gain new customers and market share. Its shuttered stores will kick off a land grab for retailers hungry for additional space.
Bed Bath will join a list of other bankrupt companies, such as Kmart and Sears, that vacated spaces and made way for stores. Bed Bath has nearly 500 locations that could open up — between its 360 namesake stores and 120 Buy Buy Baby locations — for other companies to rent. It had already shuttered many spots, as it wound down 150 underperforming namesake stores and shut all 49 of its Harmon FaceValue beauty-chain locations.
The company's stores remain open and its website is still operating. Liquidation sales began this week.
Yet Bed Bath's coming closures are hitting at a good time, according to real estate firms and retail industry watchers. The retailer has locations in high-traffic suburban areas. Its stores are easily adaptable at their size — typically around 30,000 square feet, according to industry analysts. Off-mall shopping centers' vacancy rates are low and demand is high, especially as discounters grow and traditional mall players experiment with new concepts.
Former Bed Bath stores could turn into a variety of other retail spaces, said Deborah Weinswig, CEO of Coresight Research, a retail advisory group. They could become doctor offices for CVS or Walgreens , as the drugstore chains push into primary care, or turn into grocery locations for growing chains such as Aldi or Lidl, she said.
Some may be sliced into locations for multiple companies. Others may be backfilled by a single tenant.
Bed Bath's spaces are more move-in ready than Kmart and Sears locations because by and large they were better maintained, while the better-performing stores only "need a little light dusting," she said.
"In the past, I may have been a bit more concerned if we were to go through something like this, but I'm just not," Weinswig said. "I'm not worried at this point because of the fact you've had this tremendous change in terms of demand for physical spaces."
An appetite for space
Bed Bath & Beyond's stores will go on the market as the off-mall space is hot and shoppers are flocking back to stores.
Weaker retailers' locations thinned out during the fallout of the Great Recession and again during the Covid pandemic, said James Bohnaker, senior economist with Cushman & Wakefield. Now, a mix of stronger retailers are vying for space in similar strip centers, including dollar stores, off-price retailers, direct-to-consumer players like Warby Parker and Casper, and traditional mall retailers like Macy's.
Source: CNBC
