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.
“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.
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.
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.”
TORONTO – One expert predicts Ottawa‘s changes to mortgage rules will help spur demand among potential homebuyers but says policies aimed at driving new supply are needed to address the “core issues” facing the market.
The federal government’s changes, set to come into force mid-December, include a higher price cap for insured mortgages to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
CIBC Capital Markets deputy chief economist Benjamin Tal calls it a “significant” move likely to accelerate the recovery of the housing market, a process already underway as interest rates have begun to fall.
However, he says in a note that policymakers should aim to “prevent that from becoming too much of a good thing” through policies geared toward the supply side.
Tal says the main issue is the lack of supply available to respond to Canada’s rapidly increasing population, particularly in major cities.
This report by The Canadian Press was first published Sept. 17,2024.
OTTAWA – The Canadian Real Estate Association says the number of homes sold in August fell compared with a year ago as the market remained largely stuck in a holding pattern despite borrowing costs beginning to come down.
The association says the number of homes sold in August fell 2.1 per cent compared with the same month last year.
On a seasonally adjusted month-over-month basis, national home sales edged up 1.3 per cent from July.
CREA senior economist Shaun Cathcart says that with forecasts of lower interest rates throughout the rest of this year and into 2025, “it makes sense that prospective buyers might continue to hold off for improved affordability, especially since prices are still well behaved in most of the country.”
The national average sale price for August amounted to $649,100, a 0.1 per cent increase compared with a year earlier.
The number of newly listed properties was up 1.1 per cent month-over-month.
This report by The Canadian Press was first published Sept. 16, 2024.
MONTREAL – Two Quebec real estate brokers are facing fines and years-long suspensions for submitting bogus offers on homes to drive up prices during the COVID-19 pandemic.
Christine Girouard has been suspended for 14 years and her business partner, Jonathan Dauphinais-Fortin, has been suspended for nine years after Quebec’s authority of real estate brokerage found they used fake bids to get buyers to raise their offers.
Girouard is a well-known broker who previously starred on a Quebec reality show that follows top real estate agents in the province.
She is facing a fine of $50,000, while Dauphinais-Fortin has been fined $10,000.
The two brokers were suspended in May 2023 after La Presse published an article about their practices.
One buyer ended up paying $40,000 more than his initial offer in 2022 after Girouard and Dauphinais-Fortin concocted a second bid on the house he wanted to buy.
This report by The Canadian Press was first published Sept. 11, 2024.
