Bed Bath & Beyond Closes Stores, While Other Retailers Fill the Space

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According to journalist Nathaniel Meyersohn and CNN.com, "Bed Bath & Beyond is stripping down its big blue signs, clearing out aisles of linens, and closing 400 stores as it tries to stave off bankruptcy."

But as Meyersohn continued to report, "...chains including TJ Maxx, HomeGoods, and Ross have scooped up the vacant stores. Burlington, Five Below, Nordstrom Rack, and budget gym Planet Fitness may also fill up the spaces, say retail landlords and real estate analysts."

"Bed Bath & Beyond (BBBY)’s real estate is a precious, scarce resource for retailers, gyms, and anyone else who needs ample space," Meyersohn noted. "There’s been little new retail development since the 2008 financial crisis and the rise of online shopping, and vacancy rates are at historic lows."

“E-commerce scared a lot of people off from building retail,” said Brandon Isner, the head of retail research at CBRE, a commercial real estate firm. “A lot of great real estate is going to come available into a market where there’s been no vacancies. It will not take long for retailers to occupy those spaces.”

"Particularly in a tight commercial real estate market, bad news for one brand means opportunity for another," observed Meyersohn.

"For us, the biggest source of new store locations comes from other retailers closing stores,” Burlington CEO Michael O’Sullivan had said in February. “So many of our most productive locations were formerly Circuit City or Toys ‘R’ Us or Sports Authority.”

"Store space is incredibly scarce at the moment," observed Meyersohn, "...and that’s an ongoing trend: Total new commercial retail real estate construction reached a new low in 2022 for the third consecutive year, according to CBRE. And for existing spaces, the retail space vacancy rate fell to 4.9% at the end of 2022 — the lowest level since CBRE began tracking the market in 2005."

As Meyersohn concluded, Bed Bath & Beyond has a lot to offer prospective tenants. The company has stores in all 50 states, with the most in population-dense areas in California, Texas, New Jersey, and Florida. Plus, the majority of its stores are in the suburbs of mid-size and large cities and are under 50,000 square feet, all of which are attractive qualities in retail as brands trend toward smaller spaces to save on rent, labor, and other overhead."

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