Toys ‘R’ Us is beginning the process of selling off its real estate, most of which are freestanding stores or located in open air shopping centers averaging approx., 40,000 sf. According to bankruptcy filings players in the mix include Big Lots, Hobby Lobby, Ashley Furniture, Burlington Stores, TJMaxx, Aldi, Marshalls, HomeGoods, PGA Superstore, Target and more. This auction process requires bidders to close very quickly with no financing/lender contingences which leads to only players that can afford to invest and quickly secure these assets. Developers and Investment groups have come out as candidates to purchase groups of these opportunities. Landlords in some situations are bidding to win back control of the properties and lease them up themselves. This makes complete sense as it provides the landlord the ability to gain back control of this property since they own, lease and manage the rest of the shopping center and know the demand for the local market and space. Just recently, A&G Realty Partners held auctions in early August for 123 locations totaling 5M SF which included 112 owned properties and 11 ground leases.
With high quality real estate coming to market, former Toys ‘R’ Us locations will be highly sought out assets and should generate significant activity. It’s not a matter of who, but who wants these locations bad enough. Many retailers will express an interest to fill voids in the market by attempting to win bids for select locations through an auction process. The properties range in size from 20,000 to 65,000 sf located as freestanding buildings or in open air shopping centers. The good properties will be scooped up fast while the boxes in less desirable locations that do not fill a avoid for traditional corporate retail will be converted to alternative uses such as medical office, storage, multi-family, churches, co-work space or chopped up into small retail spaces that can accommodate many different local/regional users.