Bed Bath & Beyond Locations Shuttered Around Valley Could be in High Demand

Article originally posted on Phoenix Business Journal on July 24, 2023

The bankruptcy of home goods retailers Bed Bath & Beyond and Buybuy Baby will leave more than 10 big box spaces vacant in the Valley. Retailers, landlords, and commercial brokers could see an opportunity to write the next chapter of those empty buildings

Generally, a Bed Bath & Beyond store ranges between 25,000 and 35,000 square feet, said Ryan Desmond, a partner at Phoenix-based Western Retail Advisors. While the bankruptcy proceedings still need to play out a little further, he said those spaces could be in high demand from other retail tenants or shopping center owners.

While Bed Bath & Beyond will close its stores, it still has lease agreements with the landlords. The duration of the remainder of those leases could vary, but they could possibly come with multiple options for extensions.

“So in cases another retailer might say, ‘Jeez, there’s another eight years on that lease and a pretty attractive rent, a great shopping center, I’ll pay X dollars to take that lease over,'” Desmond said. “In other cases, the landlord themselves may be the winning bidder because they want to retain control of the site to release it to who they’d like to see there. … Landlords are going to be in many cases happy to get that space back because they can fill the space at a better rent, and maybe a different use that they think is more advantageous to the center.”

There are examples of both those scenarios in the Phoenix market in a recent bankruptcy court auction.

Burlington Coat Factory, a discount clothing retailer, was especially active in the auction in late June, successfully bidding on 44 leases for an aggregate of $12 million, including one in Avondale. Schnitzer Properties, the owner of Chandler Pavilions shopping center, raised its hand for the closed Bed Bath & Beyond located within the center for $350,000. The bid deadline for the auction was June 26, according to affiliated publication Albany Business Review.

And in June, Crate & Barrel opened an outlet store in a former Bed Bath & Beyond at the Chandler Village Center, the Arizona Republic reported.

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