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'Magnificent Real Estate': 99 Cents Only Stores Will Vacate 3.8M SF In SoCal

About 3.8M SF of retail space will flood the Southern California market in the next two months with the liquidation of 99 Cents Only Stores, the discount retailer that filed for bankruptcy earlier this month.

Not so long ago, that kind of vacancy would have met a retail real estate market smarting from a bankruptcy binge that left landlords in the lurch. But these spaces are likely to be filled relatively easily, according to SoCal retail brokers. 


“Over the past five years, there's just been a lack of overall quality box inventory in LA proper or infill Los Angeles,” CBRE Senior Vice President Jamie Brooks said. “99 [Cents Only], for all its challenges, controls some magnificent real estate.” 

Commerce, California-based 99 Cents Only cited financial trouble related to the pandemic, inflation and theft in announcing its liquidation and the closure of all 371 of its stores, 164 of which are in SoCal, according to Beta Agency. Other stores in Texas, Nevada and Arizona will also be closed.

The size and format of the stores places them in the "junior box" category of between 15K and 30K SF. 99 Cents Only stores average 23K SF, according to CoStar.

Vacancy rates are low for retail across the U.S. and in SoCal, but are acutely low for stores of this size, Beta partner Richard Rizika said.

“Historically those leases were very competitively negotiated,” Rizika said. “There is an opportunity for a lot of the landlords to go ahead and increase rents if and when those leases were rejected by the bankruptcy court.”  

The company is moving through the bankruptcy process now but announced plans to have all the stores shuttered by the end of May, a timeframe that many CRE professionals said seemed accelerated. But it seems the market is ready.

All the brokers that Bisnow spoke to said they anticipated backfilling to be relatively speedy for the majority of the SoCal spaces. Overall retail vacancy in the Los Angeles area in the first three months of this year was 5.2%, according to a JLL report. Orange County’s retail vacancy was 4% in Q1 2024, a Kidder Mathews report found.  

SharpLine Commercial Partners President and founder Barbara Armendariz said that when 99 Cents Only Stores’ bankruptcy was announced, she had at least 40 calls from investors interested in potentially buying the spaces and is aware of at least a dozen retailers and users that are evaluating the chain’s portfolio for opportunities. 

“They're going to get snatched up very quickly, or as easily as the bankruptcy court allows,” said Armendariz, who worked with 99 Cents Only in LA, Orange County and the Inland Empire for over a decade. 

Some buildings could be worth more for land value, either as a new retail space or as some other use, including apartments. Though 99 Cents Only leases the vast majority of its locations, it owns 28 in California, including its store on Sunset Boulevard in Silverlake and another on Pico Boulevard in West LA, CoStar reported. 


Dollar stores in general have struggled over the last few years, but trouble has accelerated this year. Dollar Tree announced in March that it plans to close 1,000 storesDollar General is opening new stores, but both sales and operating profit decreased at the end of 2023.

Increased competition from value-focused retailer Walmart and grocer Aldi, as well as the effects of inflation on dollar stores’ profits, have been blamed for crunching this corner of the retail market. 

In its bankruptcy filing, 99 Cents Only explicitly mentioned “the increasingly competitive landscape of the discount retail industry,” but the chain has, by many accounts, struggled since 2011, when a $1.6B leveraged buyout by Ares Management and Canada Pension Plan Investment Board introduced a hefty amount of debt to its books that just kept growing. The chain had not been profitable since 2015, CNN reported.  

The overall challenges faced by dollar stores aren't just a problem for the stores and their investors. They're also a problem for the typically underserved areas where discount retailers tend to open the most locations. These areas are often food deserts and home to residents who tend to have lower average incomes. 

Perhaps to its eventual detriment, the 99 Cents Only stores offered an array of goods at affordable prices in communities that sought out deals that will no longer be available unless a similar retailer takes its place. 

Research from the University of California, Los Angeles has shown that dollar stores can create or exacerbate food deserts by keeping other grocery stores away. But in the short term, for people who need access to affordable groceries and those who work at these stores, the reality of losing their local dollar store is stark.

“In the areas of urban Los Angeles that have a scarcity of grocery stores, 99 Cent Stores provided an opportunity for people to go in and get fresh produce, bread, canned goods, certain basic grocery staples,” JLL National Agency Retail Lead Chris Wilson said. “Unless a grocery store backfills the space, that'll present a challenge for the people that have grown accustomed to very popularly priced, value-oriented grocery items.”