Study: Dollar store boom good for retail landlords
Seattle — The combined store count of the four national dollar store (or extreme value) chains — Dollar General, Dollar Tree, Family Dollar and 99 Cents Only — has now surpassed that of the three biggest national drugstore chains (Walgreens, CVS, and Rite Aid), according to a new report by Colliers International, the third-largest commercial real estate services company in the world. The white paper, “Dollar Days: How Dollar Stores are Growing in a Weak Economy,” offers insights about the success of the dollar store market and its impact on commercial real estate.
The four chains now operate approximately 21,500 locations in the United States — more than the combined stores of the three biggest drugstore chains. Typical dollar stores occupy an average footprint of 7,000 to 10,000 sq. ft. although some newer prototypes exceed 20,000 sq. ft., according to the report.
"The rapid evaporation of wealth (both real and perceived), has profoundly changed the way Americans shop and how they define value," according to Ann Natunewicz, national manager of U.S. retail research for Colliers International. "Dollar stores now serve a larger consumer base, which is fueling unprecedented growth in dollar store leasing and a significant shift in the types of retail space they take.’
Among the report’s key findings:
- Landlords recognize that as long as trading down and pinching pennies stays fashionable, any and all merchants offering "value" have more cachet. Dollar stores’ expanded food offerings have increased customer trip frequency, which generates positive spillover effects for the rest of the property. Dollar stores have upgraded both the look of their stores and the merchandise presentation, increasing their appeal to a broader demographic.
"Dollar stores are big business now," said Natunewicz. "Their product selection and price points compete favorably with the big-box stores. While the dollar stores are moving into more desirable locations, they are generally able to maintain aggressive deal terms."
- Dollar stores are becoming a more accepted tenant and are moving into increasingly better real estate locations impacted by economy-driven vacancies. Landlords in smaller markets often lease to a predominantly local tenant mix, so adding a large, national credit tenant can reenergize a leasing effort and reassure lenders of a property’s viability.
- Grocer and supercenters frequently restrict landlords from leasing space to dollar stores within a center they anchor. This trend is pushing dollar stores to locate into larger projects, lease in better-quality real estate areas, or to build new ground-up locations.
Natunewicz sees the potential for even more expansion: "The convenience they provide — bringing better products at lower prices closer to the consumer — helps dollar stores to better serve existing customers and attract new ones. Retail is habit-forming; the longer shoppers patronize a particular store or category, the more likely it is to become a permanent shopping destination."
Click here for the complete PDF version of the eight-page report.
REI makes New York City debut
New York City — REI (Recreational Equipment, Inc.) has opened its first-ever store in Manhattan, in the landmarked Puck Building in SoHo. The 35,000-sq.-ft. space has been carefully restored to honor the brand’s nearly 75-year heritage and the building’s more than century-old history.
The Seattle-based REI partnered with Callison to incorporate natural elements and historical items that were reclaimed from the Puck Building into the retail space. The building’s brick walls and ceilings, and steel columns were exposed and refurbished to honor the original structure as it appeared in the late 1890’s. Wood from the original construction was repurposed into the store’s cashier counters and canopies, display tables, chair railings, mirrors, wall coverings, signage and more.
Historic items found in the building were incorporated into display tables, fixtures and décor elements throughout the space. Approximately 30 original stone printing tablets discovered during construction and dating back to the early 1900’s are displayed near the cellar level cashier area. (The Puck Building, the original home of Puck magazine and J. Ottman Lithographic Co.) Two steam-engine flywheels — remnants of the printing presses housed in the building — are also on display.
The centerpiece of the store is a newly-constructed central staircase that physically and visually connects the main floor with two sub-grade shopping levels (joists removed from the original floor were used for the stair treads). The main floor or ground level houses camping gear, travel products, seasonal items and technical items, such as GPS units. It also features a bike and ski stop for quick repairs. A full-scale bike and ski/snowboard repair shop is located on the sub-cellar level, which is also home to a community room that will be used for classes and as a meeting space for local partners.
REI operates 122 retail stores nationwide. Looking ahead to 2012, the company’s new locations will include Woodbridge, Va.; Oxnard, Calif.; Medford, Ore.; and Indianapolis.
To see more photos of REI SoHo, click here.
No comments found
LA Fitness to open at Cityville at Cityplace
Dallas — Venture Commercial Real Estate said it represented L.A. Fitness in the completion of a long-term lease for a 50,000-sq.-ft. facility in the new Cityville at Cityplace mixed-use development, under construction in Dallas.
“Urban infill presents a challenge as we expand to open new clubs in densely populated areas such as Dallas’ Uptown neighborhood,” said John Gabriel, senior VP real estate for LA Fitness.
Venture Commercial has helped L.A. Fitness secure 27 locations across the Dallas-Fort Worth area.
No comments found