A New Dawn for Retail: How Closures Pave the Way for Local Businesses and Last-Mile Industrial Innovation

Like the Blistering and unrelenting Nevada Sun that slowly degrades anything left out in its intense gaze, the retail industry is seeing the culling of many of the most tired National retail brands/concepts that have succumbed to the intense power of change. The retail landscape is undergoing a seismic shift. Once-dominant brands, from department stores to specialty retailers, are succumbing to the relentless pressures of e-commerce, changing consumer preferences, and economic uncertainty. The year 2024 has been particularly brutal, with a wave of high-profile bankruptcies and store closures that have left a trail of vacant storefronts and shuttered distribution centers all across the county. The demise of these retail giants is a stark reminder of the rapid pace of change in the industry. The rise of e-commerce has fundamentally altered the way consumers shop, forcing traditional retailers to adapt or perish. As consumers increasingly turn to online channels for convenience and selection, many brick-and-mortar stores have struggled to compete. This shift, coupled with economic challenges such as inflation and rising interest rates, has created a perfect storm for retail. The impact of these closures extends far beyond the immediate loss of jobs and revenue. Entire communities can be affected, as vacant storefronts blight downtowns and shopping centers. The loss of these retail anchors can also have a ripple effect on local businesses, as foot traffic declines and consumer spending shifts.

So let's get this out of the way and show respect to these cherished brands we lost this year.

Container Store - Time of Hospitilzation Dec 23th, 2024 - Files Chapter 11 - 100+ Locations

Party City - Time of Death Dec 20th, 2024 - Liquidation Event Feb 1st, 2025 - 850+ Locations WorldWide - (Not a very happy birthday for me I guess) They are closing 7 DC Locations and 6 Manufacturing facilities in the US along with a Helium Mine

Big Lots - Time of Death Dec 20th, 2024 - 963+ Locations & 5 DC Locations - Cause of death According to CEO Bruce Thron - Customers "They’re seeking out value — but not necessarily lower costs."

Advanced Auto Parts -Time of Hospitalization - Nov 14th, 2024 - 700 Locations -500 Corporate & 200 Independent stores & 4 Distribution Centers primarily on the West Coast

American Freight - Time of Death - Nov 6th, 2024 -328 Locations - Liquidation Event Ongoing

TGI Friday—Time of Hospitalization—Nov 4th, 2024 - 270 Locations WorldWide—39 Corporate-Owned & Operated Locations & Stores operated by TGI Fridays Franchisor, LLC will stay open until the bankruptcy process is complete.

Franchise Group - Time of Death - Now 3 2024- Files Chapter 11 - Brining down Corporate Owned Stores of Vitamin Shoppe - Pet Supplies Plus and Buddy's Home Furnishing

True Value - Time of Death - Oct 14th, 2024 - Sale Completed to Do it Best - Dec 23, 2024 - Sort of a bright spot as many stores will be saved as it won't be a complete liquidation event.

Lumber Liquidators - Time of Death - Sept 10th, 2024 - Filed Chapter 11 and closed 211 locations. F9 Investments hopes to revitalize the brand.

Conn's Home Plus—Time of Death—July 25th, 2024—The liquidation event ended on October 31st. The company had 553 Retail Stores and over 22 Distribution Centers, all now closed.

Redbox - Time of Death - July 1st, 2024 - 34,000 Retail Kiosk Locations - Not going to be the last casualty of the stream wars. CEO also blamed

Sam Ash - Time of Death - May 10th, 2024 - Closed 42 Locations - Mexican Retailer Gonher assumed its leases and IP rights.

99 Cents Stores - Time of Death - April 7th, 2024 - Filed Chapter 11 - 371 Stores closed & 3 DC Locations in CA

Rue21 - Time of Death - May 2nd, 2024 - Filed Chapter 11- 540 Stores + DC Location in West Virgina

Now that we have all reviewed the carnage that has been 2024 the above was only a small choice sampling of the over 42+ retail brands who have filed for BK protection in 2024. Here is an image of all of the Retailers closing locations just in 2024. Credit to Aimee Picchi for the image and graphic.

A Feeding Frenzy for Bargain Retailers Begins

This wave of closures has created a feeding frenzy for opportunistic retailers. Dollar Tree, Burlington Stores, and Ollie's Bargain Outlet have aggressively acquired leases from bankruptcies like 99 Cents Only Stores, Big Lots, and Conn's HomePlus, expanding their footprints significantly. These discount retailers, adept at capitalizing on distressed assets, are poised to further consolidate their market share.

These three bankrupt retailers above closed over 1,400+ stores in 2024 and Lease acquisitions have resulted in approximately:

• 170 new stores for Dollar Tree Stores , accounting for ~25% of 2024's total openings - We saw many leases get purchased here in Vegas
• 38 new stores for Burlington Stores, Inc. — 30% of new stores open nationally
• 32 new stores for Ollie's Bargain Outlet, Inc. - 11 of them being from 99 Cent-only stores.
• 66 new stores for Grocery Outlet as of the latest filing - A combination of these and an acquisition of United Grocery Outlet

Other retailers including ALDI USA , Harbor Freight Tools , DICK'S Sporting Goods , & Barnes & Noble, Inc. , also purchased leases in 2024 and probably will have a lot more with the Container stores and party city locations coming to market.

Beyond the Bargain Bin: A New Era for Retail Real Estate

However, the story doesn't end with bargain hunters. This upheaval presents a unique opportunity for a broader reimagination of retail space. Main Street's Revival: Empty storefronts can be a catalyst for the revitalization of Main Streets across the country. These spaces offer a chance for local entrepreneurs to establish a physical presence, fostering vibrant communities with unique shops and dining experiences. Lest we forget that these behemoths of the retail industry all started off as humble one-off mom-and-pop businesses that make this country great. I am hopeful that we can see some great new concepts help fill this vacuum being left by the big names. Now the dark side as some people see it would be the conversion of many of these spaces into the realm of Last-Mile Logistics. Former big-box stores, with their ample parking and convenient locations, are prime candidates for conversion into modern fulfillment centers and distribution hubs. This shift can significantly improve delivery times, reduce costs, and enhance the customer experience. Additionally, repurposing these large-scale retail spaces can help alleviate the shortage of warehouse and distribution space in many urban areas. As a whole, this trend of finding additional infill logistics space will only increase as everyone becomes ever more accustomed to 2-hour delivery, and the trend of fresh food delivery has just begun to scratch the surface for future demand as we as a nation are woefully underbuilding cold chain infrastructure.

The demise of these retail giants doesn't signal the end for these properties. The value of these locations often extends beyond their original retail purpose. Many of these closures stem from factors unrelated to the inherent quality of the site itself – corporate missteps, shifting consumer trends, and the rise of e-commerce all play a significant role. In fact, it presents a unique opportunity for redevelopment to either Small Bay or Flex Space Industrial. My experience running point for the Retail Logistics Team within the ChainLinks network of brokers, and the experience gained working on a national basis for a tenant rep account for a national automotive client, has shown me firsthand how to capitalize on these closures. We quickly identified and pursued opportunities within the wave of 99 Cent & American Freight store closures, engaging landlords directly sometimes before they had heard the news themselves to secure prime locations for our client's needs. However, realizing this potential requires careful planning and execution. Navigating zoning regulations and permitting processes can be complex. At ChainLinks, we excel at this. We meticulously analyzed each property, reviewing CC&Rs and association documents to identify all permissible secondary uses. This proactive approach allows us to uncover hidden gems that unlock the true value of these locations and help us get properties onto their second life at their new highest and best use of the property.

By leveraging our expertise in site selection, permitting, and GIS mapping, we've consistently helped clients like our automotive clients secure and repurpose these underutilized assets. This success demonstrates the power of a strategic approach and the significant value that can be derived from adapting to the changing retail landscape. If you want a second opinion on your corporate strategy or location selection feel free to call or email our team. We'd love to learn more about your goals and how our ability to be interdisciplinary we feel brings out the conditions to have innovation take place and get better outcomes for the real estate program as a whole.

If you want a second opinion or just want to just chat maps lets do a zoom call and I can share my research and insights with your team.

Email - [email protected] - Cell 702.355.0180