Worcester Business Journal

6 Worcester Business Journal | May 15, 2023 | wbjournal.com Bed bath & bankrupt When a large retailer shuts down, it affects not only its employees and customers, but it leaves behind swaths of empty retail space across the nation. In February, Bed Bath & Beyond announced it was closing all but 360 lo- cations, down from more than 1,500 at its peak. Among those to be closed were locations in Hudson and Leominster. e lone remaining store in Central Mass. will be in Auburn, which could shutter depending on the bankruptcy. e Auburn location is a co-tenant with a Shaw's Supermar- ket, at a location once home to Service Merchandise. e owner of that shopping center is ISM Holdings Inc. of Boylston, according to the Town of Au- BY TIMOTHY DOYLE WBJ Staff Writer A er struggling through the coronavirus pandemic, national retailer Bed Bath & Beyond finally threw in the towel and announced it was declaring bankruptcy on April 23. Central Massachusetts property own- ers will be stuck with tens of thousands of square feet of retail space to be aban- doned by Bed Bath & Beyond, regardless of whether the retailer retains any stores aer it emerges through bankruptcy. Fac- tors like construction costs, interest rates, inflation, and consumer lifestyle shis pose hurdles for retailers and property owners, but local brokers are optimistic they can fill that space as the industry ex- periences a post-COVID resurgence and innovative new concepts for retail space are hitting the marketplace. "Coming out of COVID, retail has been at its peak," Ben Starr, a partner at Boston commercial real estate firm At- lantic Retail. "ere has been an increase in leasing velocity across retail." Ben Starr, partner at Atlantic Retail Bouncing ideas Following the latest retailer bankruptcies, brokers and property owners seek to keep plazas full with innova- tive concepts, like trampoline parks or pickleball Bed Bath & Beyond announced in February it would close its Hudson location. Retailers revenue These retailers who anchor more than 40 locations across Central Massachusetts have largely seen their revenue plateau or fall since the COVID pandemic took its toll on fiscal 2021 finances. Central Mass. Retailer locations Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 TJX 17 $41.7 billion $32.1 billion $48.5 billion $50 billion Target 7 $78.1 billion $93.6 billion $106 billion $109.1 billion Dick's Sporting Goods 5 $8.8 billion $9.6 billion $12.3 billion $12.4 billion Burlington 4 $7.3 billion $5.8 billion $9.3 billion $8.7 billion Kohl's 6 $20 billion $16 billion $19.4 billion $18.1 billion Best Buy 4 $43.6 billion $47.3 billion $51.8 billion $46.3 billion Source: Yahoo Finance burn. Bed Bath & Beyond leases 21,779 square feet there, according to research firm CoStar. In Leominster, Bed Bath & Beyond leased more than 43,000 square feet of space from Lisciotti Development Corp. of Leominster at the Orchard Hill Park shopping plaza. e plaza is home to a Kohl's and Dick's Sporting Goods and has further construction underway. Best Buy and Target have stores at the plaza, but the developer sold those properties. In Hudson, Bed Bath & Beyond leased 25,000 square feet from Sullivan- Hayes Northeast of Farmington, Conn. at e Shops at Highland Commons. at nearly 1-million-square-foot plaza is anchored by Cabela's, Market Basket, TJ Maxx, and Lowe's. Replacing vacated retailers Property owners may not have to wait long to refill those spaces, although not everyone agrees it is a rosy environment. As an example, Starr referenced Shrewsbury Crossing II, a retail plaza in Shrewsbury owned by First American Realty, Inc. of Worcester. at plaza has empty spaces le behind by previously closures of Bed Bath & Beyond, Pier 1 Imports, and Bob's Stores. In 2022, that space was filled by At Home, a home furnishings superstore that combined the vacant spaces into one. Worcester commercial real estate brokerage Kelleher & Sadowsky Asso- ciates said in its 2023 Commercial Real Estate Outlook for the first time since 1995, more new stores are opening than closing, and analysts expect this trend to continue despite fears of a recession. In 2022, Framingham-based TJX opened 120 new stores in the United States across five brands: T.J. Maxx (15), Marshalls (35), HomeGoods (44), Sierra (19), and Homesense (7). e City of Northborough announced in December a HomeGoods, a Mar- shalls, and a Sierra would all be opening at Northborough Crossing. While Starr sees strength in the retail real estate market locally, global consult- ing firm Deloitte sees challenges for the retail industry, according to the firm's 2023 Retail Industry Outlook. Deloitte US economists Daniel Bach- man and Akrur Barua expect retail sales to be affected by a slowing economy, reduced consumer purchasing power due to inflation, and increased spending on experiences like dining and sporting events they missed during COVID. Deloitte sees a bright side with retail- ers coming out of the pandemic. Com- panies have learned resiliency, learning to adapt, which will be helpful if there is an economic downturn. "Retailers learned to be better at retail," said Starr. Starr remains bullish on retail properties despite potential economic headwinds. e only problems he sees are with high construction costs and interest rates making buildouts expen- PHOTO | TIMOTHY DOYLE

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