More Retailers Downsizing

Apr 10, 2013

Bisnow - April 10, 2013 - by Tonie Auer

Combine a slowed economy with increased Internet sales and more efficient forms of merchandizing, and you've got the recipe for big boxes and junior anchors (in particular) looking at downsizing, says Venture Commercial SVP Susan Ridley. It has various shapes and forms, from reducing their number of stores to creating smaller format stores, or reducing a store's footprint by giving up square footage. (Soon stores will be the size of dollhouses, and you'll browse with a magnifying glass.)

Big box tenants in DFW and across the country have tried various forms of downsizing: Walmart, Target, Kohl's, PetSmart, Sports Authority, and Michael's have considered creating smaller format stores especially for urban markets. Old Navy, Office Depot, Best Buy, Ashley Furniture and others have investigated downsizing existing stores. Then, there's the option of closing stores.

Trying to reduce occupancy costs and make more efficient use of space leads many stores to reduce the size of existing space and physically create a separate store, Susan says. Sometimes, it works if the landlord is willing to take the space back and is willing to work out the construction logistics and assume the cost to split the premises. An additional cost is the reset of the store once the premises have been demised. That cost may also be the burden of the landlord and incoming tenant.