You may have heard the latest news about or favorite childhood memory, Toys ‘R’ Us filing for Chapter 11 bankruptcy protection back in December of 2017, it’s a sad day for those of us who grew up with Geoffrey the Giraffe. But the news has the commercial real estate world running to closing stores in hopes that they can secure the property for themselves.
Despite filing for bankruptcy, Toys ‘R’ Us is still attracting customers, it’s just that these customers are of a different age group. These new customers are now consisting of retailers, landlords, and investors who are looking to bid on the store’s physical location. Since the store’s auctions began, prices for the physical locations have ranged anywhere from $10-$500 per sq. ft., according to an industry source.
About 100 locations have been for sale since the announcement of the filing back in December, now the entire portfolio of 700 stores are closing and eager retailers and investors are scrambling to pick up a location. Unfortunately most of the closing stores are already vacant and lack income, for that reason they do not qualify as cap rate trades. But this isn’t stopping retailers and investors from bidding on locations; one store in California was able to attract a crazy winning bid of $15.6 million, whereas some other locations were disposed at auction for $10,000 or at times even less.
Some of the big name retailers bidding on Toys ‘R’ Us locations were Big Lots! and Raymour & Flanigan, while the rest of those bidding were real estate investors and landlords who were trying to win back control of the property.
Toys ‘R’ Us’ unfortunate filing for bankruptcy brings forth a number of opportunities for the CRE world, what do you think this means for CRE? Are these buildings and their locations all they’re cracked up to be?
To learn more about Toys ‘R’ Us’ store closures and the retailers and investors swarming to grab a location, visit http://www.nreionline.com/retail/what-bidders-are-willing-pay-toys-r-us-stores .