Natural Grocers move - fallout from BBB bankruptcy?

[SamSpade]

This week, the Natural Grocers location in Beaverton, Ore. moved about 0.25 miles away from a stand alone store with its own parking lot (severely remodeled former Marina or at least domed roof Safeway) to a larger shopping center around the corner.

While I could see some positive reasons for this move - the center houses a diverse Asian grocery that also attracts other customers for its inexpensive but ugly produce and deep meat/seafood counter - seems like N.G. could be a good compliment to help fill in baskets with more supplements and mainstream U.S. groceries in that regard. This location is also near an easy pedestrian egress to a nearby central transit hub for bus and rail commuters.

Natural Grocers was in part of a former Bed Bath and Beyond store, which moved a few miles away. If they were sub-leasing from BBB, perhaps that is why they moved?

[storewanderer]

This could be the case. Christmas Tree was also somehow tied heavily in with BBB on some store leases and I have wondered if that going under may be part of BBB. However looking at Christmas Tree's format, etc., it looks like a useless store that failed because it was a useless store.

If we start to see strange things happening with World Market then it will become evident/clear that there are lease issues that were tied to BBB that are causing these to close.

Some of this sort of thing happened back when Fleming went bankrupt too. Fleming was guaranteeing leases for some independent stores it supplied; when there was no Fleming left to guarantee leases, the stores either had to find a different party to guarantee the leases or if the landlord wasn't comfortable going forward, lost their lease.

[babs]

This week, the Natural Grocers location in Beaverton, Ore. moved about 0.25 miles away from a stand alone store with its own parking lot (severely remodeled former Marina or at least domed roof Safeway) to a larger shopping center around the corner.

While I could see some positive reasons for this move - the center houses a diverse Asian grocery that also attracts other customers for its inexpensive but ugly produce and deep meat/seafood counter - seems like N.G. could be a good compliment to help fill in baskets with more supplements and mainstream U.S. groceries in that regard. This location is also near an easy pedestrian egress to a nearby central transit hub for bus and rail commuters.

Natural Grocers was in part of a former Bed Bath and Beyond store, which moved a few miles away. If they were sub-leasing from BBB, perhaps that is why they moved?

If they were subleasing from BBB, then that lease would have gone up for auction with little impact to NG. Also, it's been quite a few years since BBB signed the original lease. I suspect the lease 8r sublease was ending and they were looking for a better location.

[babs]

This week, the Natural Grocers location in Beaverton, Ore. moved about 0.25 miles away from a stand alone store with its own parking lot (severely remodeled former Marina or at least domed roof Safeway) to a larger shopping center around the corner.

While I could see some positive reasons for this move - the center houses a diverse Asian grocery that also attracts other customers for its inexpensive but ugly produce and deep meat/seafood counter - seems like N.G. could be a good compliment to help fill in baskets with more supplements and mainstream U.S. groceries in that regard. This location is also near an easy pedestrian egress to a nearby central transit hub for bus and rail commuters.

Natural Grocers was in part of a former Bed Bath and Beyond store, which moved a few miles away. If they were sub-leasing from BBB, perhaps that is why they moved?

If they were subleasing from BBB, then that lease would have gone up for auction with little impact to NG. Also, it's been quite a few years since BBB signed the original lease. I suspect the lease 8r sublease was ending and they were looking for a better location.

However, I suspect the reason the BBB store in Beaverton closed sooner than the rest is that they had a sublease arrangement with REI to go it..it was a little suspect that REI announced their store in Portland was closing but not until February back a few months ago. But now it turns out this new store is opening in March? I think this was arranged a while back but they didn't want this to look like a move but rather two separate decisions.

[bryceleinan]

When Natural Grocers moved into Reno, it was when Office Depot was trying to shrink the size of their locations. Office Depot moved into the former Michael's that moved into a larger building adjacent to Walmart in the same plaza. Once OD moved, Natural Grocers remodeled and moved into their space. It may have been a similar situation in that NG was able to make a move for a building that better fit their demographic.

[storewanderer]

In Reno, NG is only using the front 60% or so of the building. And that part they are using is very spacious. They could cut half of the space of the sales floor and still have more than enough room for what they are doing. I think the situation was Office Depot wanted a smaller space, the Michaels space opened up and was the size they wanted a smaller space they moved, and with Circuit City vacant, Sports Authority vacant, so the landlord was desperate to get something in the space.

Reno NG opened in 2014.

What I can't remember is did NG come first or did Floor & Decor? I want to say Floor & Decor... Safeway sat on the empty building there until Floor & Decor moved in and even kept it fixtured.

The amount of unused space at the back of the Reno NG makes no sense. There would be enough space there for another 15k square foot tenant if they had divided it from the front to back...

[BillyGr]

This could be the case. Christmas Tree was also somehow tied heavily in with BBB on some store leases and I have wondered if that going under may be part of BBB. However looking at Christmas Tree's format, etc., it looks like a useless store that failed because it was a useless store.

If we start to see strange things happening with World Market then it will become evident/clear that there are lease issues that were tied to BBB that are causing these to close.

Some of this sort of thing happened back when Fleming went bankrupt too. Fleming was guaranteeing leases for some independent stores it supplied; when there was no Fleming left to guarantee leases, the stores either had to find a different party to guarantee the leases or if the landlord wasn't comfortable going forward, lost their lease.

Christmas Tree was once owned by BBB, but they sold it off a couple years back, thus their bankruptcy was NOT connected to what was happening with BBB.

It was also NOT a useless store, and did quite well for many years (decades even as you get closer to their origins out by Cape Cod in MA).

While the name was Christmas Tree Shops, they had far more than just Christmas items (in fact, they only had those during the time of year stores normally carry them), but they did have a fair amount of items for every holiday season that some stores don't do as much for, plus a variety of items for home, food items (like a larger version of what Marshall's/TJ Maxx does on those) and had gotten into more HABA while connected to BBB, via their Harmon brand (but kept it after they split off).

[ClownLoach]

Various news agencies have covered the fact that BB&B actually was so badly wanted by landlords in the past that they were paying some of the cheapest leases per square foot in retail. (They were lying to their employees when they said their stores were closing because the rent wasn't affordable). They used to deliver high income shoppers that other chains would pay a rent premium for to have a location next door. Many landlords offered to take the keys back "at no charge" and sever the lease because they knew they could flip the lease in a day with a tenant paying twice as much or more for their generally premium quality spaces. This is probably the only reason they even made it through the holidays without being forcibly sued into the bankruptcy process; many landlords were available and ready to take the lease off their hands while waiving the millions in penalties that ride on most lease severances. BB&B wasn't subleasing these sites or we would have seen them go through auction as already explained above.

[ClownLoach]

In Reno, NG is only using the front 60% or so of the building. And that part they are using is very spacious. They could cut half of the space of the sales floor and still have more than enough room for what they are doing. I think the situation was Office Depot wanted a smaller space, the Michaels space opened up and was the size they wanted a smaller space they moved, and with Circuit City vacant, Sports Authority vacant, so the landlord was desperate to get something in the space.

Reno NG opened in 2014.

What I can't remember is did NG come first or did Floor & Decor? I want to say Floor & Decor... Safeway sat on the empty building there until Floor & Decor moved in and even kept it fixtured.

The amount of unused space at the back of the Reno NG makes no sense. There would be enough space there for another 15k square foot tenant if they had divided it from the front to back...

The unused space is very common these days and happens more often than you might think. Lots of former Sports Authority stores are like this.

I went through this with a large barn that was 15,000 Sq ft larger than our prototype and tenant responsibility for interior improvements. The cost to separate a dock, plumb for bathrooms, separate systems etc. was higher than the estimated rent income if we prepared the extra space for sublease. So they just walled it off and our operating permit prohibits us from using the extra space because it wasn't brought up to code like the rest of the building. (Our store was still oversized for the chain but we just couldn't swallow all that extra space plus it would skew our sales per Sq ft figures that Wall Street so adores)

If the store had a constrained receiving area and couldn't effectively subdivide the building to create a second dock affordably but otherwise the rent is a bargain then they just mothball and enclose empty space. Lots of closed Sports Authority and Toys R Us stores have done this. More current building codes now require that when a big box like that gets split in two they can't just erect some drywall and call it a day; now they must separate all building systems including fire sprinklers, and construct a proper demising firewall to effectively make it into two separate buildings. Usually that is only profitable if you're cutting up a monster like an old Kmart, Lowe's or other 100K size barn.