Feb 03
As chains like Big Lots, Joann and Party City pursue bankruptcy, real estate executives from Burlington to Planet Fitness and Barnes & Noble are champing at the bit to take their empty spaces.
2024 was a banner year for retail bakruptcies. Coresight Research tracked 51 major retail bankruptcies during the 2024 calendar year, up from 25 in 2023, opening up millions of square feet of real estate as a result. Gordon Brothers is now marketing hundreds of Big Lots locations for lease transfers to other retailers. A&G Real Estate Partners said on Jan. 3 it plans to auction off 695 Party City locations, targeting gyms and entertainment tenants, dollar stores, local specialty retailers, furniture stores and medical office clinics as potential tenants.
This is a relief to the retailers that are trying to expand, as empty retail space has been especially hard to find. The availability rate for retail space nationally held at 4.7% for all of 2024, according to CBRE. That is the lowest rate since the commercial real estate brokerage began tracking this figure in 2005.
“I don’t think I’ve ever seen this much enthusiasm from retailers when it comes to other retailers going bankrupt,” Geno Coradini, national managing director of retail tenant representation for real estate brokerage JLL, said on Jan. 30 on a panel of big-box real estate executives and brokers at an ICSC conference in Dallas.
Jason Baker, principal at Houston-based real estate firm Baker Katz, said that it is so competitive that oftentimes, landlords will have three, four or five letters of intent from different retailers for a single vacancy.
“As we have seen these spaces become available, like physically become available, there has been a run on these spaces with retailers who have wanted to expand but couldn’t find the space,” Baker told Modern Retail. “These are typically spaces that are in shopping centers with good co-tenancy that are, in many cases, well-designed with ample parking and visibility. They check the boxes of the needs for so many of the retailers that either we represent, or we know that have an interest now in expanding.”
The discounter has been “very, very aggerssive” after past bankruptcies, including Toys ‘R’ Us and Bed Bath & Beyond, Dante Fratarcangelo, senior director of real estate for Burlington, said in the panel discussion. He said retailers recognize there is a constraint on the supply of good space, so any and all avenues to attain space for new locations are fair game. Pursuing bankruptcies, splitting former big-box spaces with other retailers and building ground-up construction are “all on the table for us right now,” he said.
Mark Miller, vp of real estate and development for Planet Fitness – which opened 150 new gyms in 2024 – is also in the market. He said he and other retail executives are in talks with restructuring firms like Gordon Brothers, the company managing the Big Lots and Party City liquidators. “I think we’re all real excited about it, unfortunately to say,” Miller said onstage.
Barnes & Noble also plans to seize on many of the prime retail spaces vacated by struggling retailers. The largest. brick-and-mortar bookstore in the U.S. is in the midst of rapidly expanding its retail footprint. Last year, it openned 57 stores, the most in a single year in nearly two decades, and it plans to open at least 60 this year, Barnes & Noble’s CEO James Daunt told Modern Retail in an interview.
“It’s often based on the trials and tribulations of other retailers,” Daunt said of Barnes & Noble’s expansion strategy. “We took quite a few Bed Bath & Beyonds because they went out of business, and at the moment, we’re snapping up quite a few Big Lots.”
Ironically, Barnes & Noble, which until recently was a beleaguered retailer itself, is returning to major cities where it previously shuttered unsuccessful stores. Those markets include Chicago and Washington D.C.
Although Barnes & Noble, is targeting the shuttered storefronts of bankrupt big-box stores, the retailer isn’t following a rigid corporate blueprint for new store locations. “The smallest store we’ve opene has been about 3,000 square feet, and we have a 35,000 square foot store opening this week,” Daunt said. “We’re still opening these monsters, but we’re also doing very small stores where we’ll grab the opportunity in it.”