No space left behind: Bed Bath & Beyond, Tuesday Morning closures open doors for others
A swath of retailers are closing their doors in Fort Worth and North Texas, but real estate experts say the spaces they leave behind remain in high demand.
Bed Bath & Beyond filed for bankruptcy in April and started the process of closing its stores nationwide. A banner reads “Store Closing!” at a location at 931 Overton Ridge Blvd. by Hulen Mall in Fort Worth. The doors are plastered with signs advertising sales.
And big-box retailer Walmart is shutting down an e-commerce fulfillment center in Fort Worth and will lay off over 1,000 workers by June 2. The company is also closing a store location in Grapevine by July, according to Texas Workforce Commission’s Worker Adjustment and Retraining Notification.
Despite the trend of retail closures each year due to low-performing stores, the DFW region’s growing population still makes it an attractive place for stores to expand, industry watchers say. Discount stores, new concept stores and fitness franchises could fill the space.
Why are some big box retailers closing?
Bankruptcy is not the only reason retail stores close, said Venkatesh Shankar, a chair professor of e-commerce and marketing at Texas A&M’s Center for Retailing Studies. Customers are spending less with increasing prices and interest rate hikes on credit cards. Some retailers realize there are too many stores next to each other. And every year, there’s bound to be stores that don’t perform well, Shankar said.
By some estimates, some 50,000 stores across the nation will close by 2027.
“The concept called ‘store apocalypse,’ had been haunting the retail industry for a while,” Venkatesh said. “There’s always some nonperforming stores every year.”
Natural Grocers, for example, is closing 25 locations across the country. That includes a Fort Worth location at 5230 N. Tarrant Parkway and in Coppell, at 120 S. Denton Tap Road. Co-president of Natural Grocers, Kemper Isley, cited low performance.
Placer.ai, a company that tracks foot traffic to retail stores using cellphone data, shows an increase in visits to discount and dollar stores, restaurants and fitness chains in the first quarter of the year. Overall retail, grocery stores, malls and superstores like Walmart and Target saw decreases in visitors.
Retail real estate goes through cycles, said Bob Young, the executive managing director at Weitzman. Sometimes brands get out of touch – they don’t keep track of how many stores are next to each other or pay attention to how well they are doing in each market. Retailers tend to close stores if they realize they are underperforming and add stores in locations that can generate more sales.
Sometimes that cycle cannot be maintained and results in bankruptcy, Young said. While Target and Walmart stopped spending huge amounts of money on new stores to focus on online, Bed Bath & Beyond didn’t adapt as much.
“Then what happens is, somebody else comes up with a better mousetrap,” he said.
Where some fail, others succeed
Weitzman CEO Marshall Mills wrote in a blog post that some retailers have upped their game and managed to compete with the “endless aisles” of e-commerce available to consumers.
Barnes & Noble is expanding for the first time in years as it caters its stores more to local readers with a mix of large and small stores. PetSmart is bringing in customers through “internet-resistant” services such as grooming, veterinary and training, Mills wrote.
Shopping centers have also learned to adapt, Young said. Some of the best centers are anchored by grocery stores because they attract regular customers. Fitness chains are also booming following the COVID-19 pandemic, which is reflected in Placer.ai data.
Dirt is regularly being moved for new retail or restaurants at Glade Park, which sits west of Texas 121 and is bordered by Bedford, Colleyville and Grapevine. And there will soon be a vacancy where a Tuesday Morning is located.
The spaces Bed Bath & Beyond leave behind are in big demand.
Rob Franks, managing director for retail real estate in the Dallas-Fort Worth region at JLL, said DFW remains a hotspot for retail. High population growth, and strong store and restaurant trends make the Dallas-Fort Worth area attractive for new retailers, Franks said.
Occupancy rates in Fort Worth are hovering at 94% in the Dallas-Fort Worth area. Potential tenants form a line for spaces in well-performing shopping centers that stores like Tuesday Morning and Bed Bath & Beyond leave behind.
“It’s almost (like) sharks in the water,” Franks said. “It creates … a big push of every retailer that has ever looked at boxes of that size, is taking those lists and putting it up against their existing store lists, and their market growth opportunities and trying to figure out, hey … how many of these can we take?”
A major reason why there’s such demand for space is that construction hasn’t caught up with demand. Five or six years ago, he said, if a vacancy popped up, there might be multiple options.
“Right now, today, for many (retailers), they’re limited options,” Young said. “And so now what we’re seeing is we might have two or three people competing for the same space, because there is no space for them.”
Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at email@example.com and follow on Twitter at @sbodine120.
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