Landlords across the region are beginning to find new tenants to fill the hulking retail spaces vacated by ÁñÁ«ÊÓƵ Authority nearly two years after the retailer liquidated and turned off the lights at all of its 450 stores across the country.
When , it left behind approximately 350,000 square feet of empty store space in the St. Louis area – storefronts that remained dark for more than a year.
That’s starting to change.
Of the nine ÁñÁ«ÊÓƵ Authority locations that were in the metro area, three have found new tenants — Dick’s Sporting Goods in Fairview Heights, Overstock Furniture and Mattress in Lake Saint Louis and Williams-Sonoma in Fenton.
People are also reading…
Four additional stores are close to being reclaimed by an Aldi in St. Peters, an AutoZone in Kirkwood, a Bed Bath & Beyond in Brentwood and an undisclosed tenant or tenants in Bridgeton. That leaves just two locations — Ellisville, at 15907 Manchester Road, and South County, at 4445 Lemay Ferry Road — with uncertain futures.
The leasing activity, said Pace Properties Managing Director Joe Ciapciak, is a positive sign for St. Louis’ retail sector, which like everywhere else across the United States is struggling to keep up with changing consumer shopping habits.
“Generally, all of those old ÁñÁ«ÊÓƵ Authority stores were well located,†he said. “So this just reinforces the idea that there is still demand for good, physical real estate.â€
About 7.8 million square feet of retail space is empty in the St. Louis area today — or about the size of 200 ÁñÁ«ÊÓƵ Authority stores — giving the region a vacancy rate of 5.1 percent, up from 4.8 percent at the end of 2017, according to market research from CoStar.
Nevertheless, that level of occupancy is still the best St. Louis has seen in more than a decade. And the average rental rate landlords have been able to charge has increased for five straight quarters, signaling a turnaround from the renter’s market that has been in place since about 2012.
Matt Kopsky, a real estate investment trust analyst for Edward Jones, said he’s starting to see ÁñÁ«ÊÓƵ Authority locations fill up elsewhere in the country.
“It’s difficult to fill these boxes so it can take some time with having to clean up or build out the new space,†he said.
Retail bankruptcies similar to ÁñÁ«ÊÓƵ Authority have hurt many real estate owners. More hits are on the horizon with Toys R Us and Babies R Us set to close nearly 800 stores later this year, including seven in the St. Louis market.
The Babies R Us closing could be especially detrimental in South County, where a Babies R Us sits next door to a vacant ÁñÁ«ÊÓƵ Authority in Southpoint Plaza, near the intersection of Lemay Ferry Road and Interstate 270.
Babies R Us is expected to close this summer, which would leave the two anchor stores vacant in that shopping plaza. And given its location, where dozens of big name retailers already do business, there are few retailers of that size that can fill that type of space.
“There’s not a lot of tenants that fit into those types of boxes,†Ciapciak said. “There are tenants above the 50,000-square-foot range and under the 25,000-square-foot range, but not many in that 35,000- to 40,000-square-foot range. Those boxes are either too big or too small.â€
An option for landlords could be to carve them up — basically build walls within the locations that don’t lease and create two smaller stores that would be more in line with market needs.
But that takes time and money, Kopsky said.
“It would be a hit for (landlord’s) earnings in the near term because they’re not collecting rent in many of those cases,†he said. “But in the long term, when you split boxes into multiple tenants, you’d be collectively earning higher rent. The concern is that there could be too much supply on the market at once, which would put the pricing power back in the tenants’ favor.â€