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What will happen with all that vacant real estate?

Nostalgia mixed with sadness rippled through the country last week as American retail staple, Toys R Us, closed its doors.

Is online shopping to blame? What about other retailers with large toy sections like WalMart and Target?

These factors certainly didn’t help the company’s situation. But the rise of online retailers like Amazon didn’t force Toys R Us out of business (link underlined to – http://money.cnn.com/2018/03/15/news/companies/toys-r-us-closing-blame/index.html). No doubt there is disruption in the industry caused by the Internet and online-giant, Amazon. But what I think is too often overlooked is the MASSIVE debt load that these retailers have taken on and how that became their downfall.

Toys R Us is a perfect example of a retailer whom took on too much debt, and when market share began to be eroded because of the rise in online retailers, the toy store’s debt became an anchor versus a platform to grow.

Sure, as a landlord a vacancy is nothing fun to deal with.  It’s costly and could present co-tenancy challenges, but there is a silver lining – a vacancy can create opportunity. There are plenty of retailers growing and have not been as effected by the industry disruption and are in good financial standing.

As we speak T.J. MAXX, Hobby Lobby, and Burlington have targeted a number of these closing stores as future locations as they continue to grow and have strong financials. But there are other plenty of retailers that are showing no signs of slowing down and continue to grow in addition to the three above – Marshals, HomeGood, Ulta, Aldi, Five Below, Publix, Dollar Tree, Burkes, continue to show positive store growth.

As you identify new opportunities, choose your retailers wisely, monitor their financial health… but always, always buy good dirt because someone will always want to be there.

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