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Bed Bath & Beyond's seemingly inevitable march to a bankruptcy filing has prompted its landlords to prepare a Plan B.
The New Jersey-based retailer is closing 142 more locations it controls, comprising 87 Bed Bath & Beyond stores, five Buy Buy Baby stores and all 50 of its Harmon beauty products locations. The new closure announcement comes after previous rounds of cuts affected dozens of stores and included a wave of layoffs.
Bed Bath & Beyond warned investors earlier this month that there's a possibility it will have to enter Chapter 11 bankruptcy protection, but unlike previous major retail bankruptcies, landlords are finding demand for potentially vacant big-box stores.
An unnamed landlord with 12 Bed Bath & Beyond locations in its portfolio has assurances from retailers including Trader Joe’s, Sephora, T.J. Maxx, Dick’s Sporting Goods and HomeGoods that they would fill vacated stores, The Wall Street Journal reported, citing unnamed sources.
North American Properties recently divided up a vacant, 22K SF Bed Bath & Beyond it owns in Atlanta into a 15K SF new Barnes & Noble location and two smaller storefronts, an NAP executive told the Journal.
RCS Real Estate Advisors partner Spence Mehl, who worked on Bed Bath & Beyond's retail strategy in recent years, told the WSJ the chain's stores are as small as 18K SF to 70K SF, a much wider range than typical large chains — meaning a mass takeover by one brand is unlikely.
But with hundreds of potential future closures, coupled with Party City's bankruptcy this month, retailers who have been trying to expand could soon have many more options. And the list of expanding retailers is surprisingly long: 2,400 more retail locations opened than closed last year, according to Cushman & Wakefield.
In the third quarter, retail availability dropped to 5% nationwide, the lowest level on record since CBRE began tracking in 2005.
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