A transformation is about to take place across the United States, as Bed Bath & Beyond stores make way for a new era of businesses led by Burlington Stores. The struggling home goods retailer recently auctioned off its leases as part of its bankruptcy proceedings, and Burlington emerged as the top bidder, securing 44 locations for $12 million. In total, Burlington will take over 50 leases, including six additional ones outside of the auction process, for a grand total of $13.53 million. This move provides an opportunity for retailers in growth mode to establish a presence in prime locations with strong sales records.
Bill Read, Executive Vice President of commercial real estate firm Retail Specialists, noted that the Bed Bath & Beyond locations up for grabs are considered some of the best available. Typically located in large community centers with popular anchor tenants like Target, these stores present an enticing prospect for retailers looking to expand in well-established markets. The successful lease acquisitions cover stores ranging in size from 14,000 to 92,000 square feet.
Alongside Burlington, other retailers also secured leases through the auction. Among the winners are Michaels, Haverty, Macy’s, and Barnes & Noble. The total proceeds from the lease auction amount to $24.41 million, which will help cover unpaid rents and repay Bed Bath & Beyond’s creditors.
The availability of these leases comes at a time when vacancy rates for shopping centers have reached their lowest level since 2007. This presents a unique opportunity for companies looking to expand their footprint in the retail landscape.
Burlington, with plans to open 70 to 80 net new stores in fiscal year 2023, recognizes the potential that retail bankruptcies offer in terms of securing desirable locations. CEO Michael O’Sullivan expressed confidence in the success of these acquisitions, citing previous experiences with failed retailers that resulted in successful store openings. The company’s real estate team has a track record of turning bankruptcies into growth opportunities.
According to Read, Burlington’s aggressive approach in the auction is no surprise. The company is focused on achieving its store count goals and sees tremendous value in the available leases. Compared to other retailers who already have a substantial store fleet, Burlington faces less competition in the auction and can secure desirable locations at reasonable rents.
Retail bankruptcies and off-price expansion
The current landscape of retail bankruptcies presents a unique chance for expansion. The availability of attractive store locations due to these bankruptcies is having a significant impact on the retail real estate market. Burlington’s success in acquiring Bed Bath & Beyond’s leases is a result of its strategic approach to store expansion and its history of capitalizing on previous bankruptcies.
With the lowest vacancy rates in years, this wave of lease acquisitions will shape the future of the retail industry. Burlington’s investment in prime locations at reasonable rents provides a solid foundation for its growth plans in the years to come.
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