What Happened to the Former
Toys R Us
Locations?
Since Toys R Us filed bankruptcy and closed their stores in June of 2018, much has changed in the retail world. Retail bankruptcies have skyrocketed, mainly due to a pandemic, but that’s not the only problem retail has faced. Before COVID-19 hit, several retailers felt the effects of too much debt, lagging sales, and consumer uptick in online shopping.
While there are many reports about why Toys R Us failed, this report
takes a deep dive into the former locations, and what types of stores are
backfilling those empty boxes.
While malls have been particularly hard hit by the pandemic, retail around malls has remained rather resilient. The Toy R Us bankruptcy was not the largest retail failure, but in terms of available real estate it was one of the largest with more than 30 million square feet of big box space dumped on the market. Around almost every mall in the U.S., was a Toys R Us or Babies R Us. These 30-50,000 sf boxes were generally well-located, yet many were dated in appearance and in need of a new occupant.
Backfill by Retail Category
Retail Specialists took a deep dive into the companies backfilling all these large former retail spaces. The top ten use categories dominated the type of uses backfilling these empty boxes. In fact, the top ten uses covered 390 store locations.
In our first two updates, the trend was for discount, furniture, and apparel stores. These three categories have continued to dominate the releasing efforts with chains like Burlington (45), Big Lots (32), Ollie’s Bargain Outlet (30), and Ashley HomeStore (17) leading the way.
Burlington, Big Lots, and Ollie’s Bargain Outlet have collectively taken at least 100 former Toys R Us locations. All three of these retailers reflect the growing demand for discount retail, with prices on the lower end of the spectrum. This category of store reflects the changing retail landscape to stores at the higher and lower end of the retail market, while stores in the middle like Sears, JCPenney, Pier 1 have lost their customer bases.
With over 750 vacant spaces
created by the Toys R Us
store bankruptcy, Retail
Specialists has tracked 432
new deals taking some or all
the former space.
BY LEADING CATEGORY:
1. Furniture Store
2. Discount Store
3. Apparel
4. Grocery store
5. Hobby craft Store
6. Sporting Goods
7. Entertainment
8. Fitness
9. Home Improvement
10. Self-Storage
97
78
65
39
31
26
16
15
14
8
There is always a substantial lag from when a large retailer vacates space to when a new retailer opens its doors - typically 18 months at a minimum. One of the reasons the first wave of openings was retailers taking the entire space is that subdividing a former anchor box is not only expensive, it’s also time consuming with difficulties involved in splitting the power, new facades, and adding docks. The leading category of uses is led by furniture stores. Collectively we have monitored 97 spaces being taken by furniture stores, which accounts for 12% of the total space. Store count by brand is Ashley HomeStore (17), Bob’s Discount Furniture (14), Raymour & Flanigan (11), and Scandinavian Designs (8).
BEFORE
Scandinavian Designs. While we tracked over 30 locations as being acquired at bankruptcy auctions, we can only trace 8 locations that have opened. Some of the prior locations can be traceable to them, but other uses have opened in the location or the space is being marketed for lease.
Furniture chains tend to be very regional in nature and an abundance of smaller regional furniture stores have taken many of the locations. Retailers like Value City Furniture (4), Havertys Furniture (3), and Kimbrells Furniture (3).
Grocery Stores (39), Hobby and Craft (31) and Sporting Goods stores (26).
Grocery
Grocery stores have taken 39 former locations with Aldi (10) and Amazon Fresh (5) leading the way. New to market has been Amazon Fresh and they have been very active with former Toys and Babies R Us locations. While they remain secretive about new locations, we have tracked five so far and expect a few more to show up. Their first Amazon Fresh opened in a former Toys R Us in Woodland Hills, CA and their second store was a former Babies R US in Irvine, CA.
Unlike ALDI, we have only tracked one LIDL store in a former Toys R Us in Riverhead, NY. Trader Joes which only opens 10 to 15 new stores each year has taken 2 locations. We include Wine and Spirit stores in our count of Grocery stores and Total Wine & More has taken four locations.
Hobby and Craft
Also, very active has been Hobby Lobby. We can identify 24 locations and we suspect there are more we have not discovered yet. The size of Hobby Lobby is a perfect fit for most former Toys R Us locations. There are four Michaels locations and unlike Hobby Lobby, the Michaels store footprint is smaller (25,000 sf), and these boxes are often subdivided with room for another merchant.
Sporting Goods
The Sporting Goods category has also taken a good portion of space with 26 locations. Toys R Us locations often were regional in nature and pulled from a wider area than most smaller markets and helps explain why Sporting Goods retailers would like these big box locations near major traffic generators. PGA Super stores led the category with taking 9 locations, followed by REI taking 4 locations and Dick’s Sporting Goods taking 3 locations and 2 spaces for Golf Galaxy. Dick’s also opened several temporary stores for its Dick’s warehouse temporary store.
Additionally, Decathlon, the world’s largest sporting goods retailer, opened
a Flagship store in a former Toys R Us in Emeryville, California in the East
39
31
BEFORE
Additional Categories
Rounding out the top uses are Entertainment (16), Home Improvement (14) and Fitness (15) uses and Self Storage (8). The entertainment category is dominated by various types of trampoline parks like Urban Air (8), Extreme Air, Defy and Launch and Speedway Indoor Karting.
Home Improvement stores like Floor & Décor (2), Northern Tool (2), Lomax Carpet and Tile and East Coast Appliance.
Fitness users included Planet Fitness (6), Crunch (3) and smaller chains like Chuze, Edge, Onelife Fitness, and Youfit.
Not surprisingly, some former locations have been converted to self storage facilities such as U-Haul. These tend to be freestanding buildings with convenient access and visibility to major interstates.
BEFORE
AFTER
Subdividing the Space
In our tracking, in many instances one retailer took most of the space and the remaining space remained to be leased. There are multiple examples of boxes being split in two for the likes of OldNavy, Ross, Michaels, Aldi, and Five Below. In one instance, the space was split for Ross and their sister company dd’s DISCOUNTS took the remaining space. In another case the space was split for a Ross and ULTA. We have been unable to confirm how many ULTA’s have opened in subdivided Toys R Us, but the number is believed to be larger than a few. There have been two foreign retailers opening stores in US. Already mentioned was Decathlon Sporting and the other is WREN Kitchens which opened a new store in Milford Connecticut in a former Babies R Us. They have 90 locations in the UK.
Moving Forward
In summary, it is our opinion that much of the better real estate has been leased and the remaining spaces will be the harder to fill. The demand has certainly been strong with over 18 million square feet of vacant space occupied with new stores.
While there are still 350 spaces to be released, it has only been two years since the space became vacant and over 50% of it has been taken.
