Albertsons closing Irvine, CA

California. No non-grocery posts.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Albertsons closing Irvine, CA

Post by storewanderer »

Bagels wrote: February 2nd, 2021, 8:12 pm Wow, that was fast. I tried stopping at Walmart but it’s closed in preparation of liquidation.
Wal Mart knows how to clear a store in a liquidation sale. It will be a mob scene.
ClownLoach
Valued Contributor
Valued Contributor
Posts: 2689
Joined: April 4th, 2016, 10:55 pm
Has thanked: 39 times
Been thanked: 289 times
Status: Offline

Re: Albertsons closing Irvine, CA

Post by ClownLoach »

Bagels wrote: February 2nd, 2021, 7:40 am
ClownLoach wrote: February 1st, 2021, 11:10 pmFor what it's worth I spoke to the Manager at that Quail Hill store before the pandemic and they were looking at converting it to a Pavilions... But cutting down the size at the same time. Less square footage would have likely made it more profitable, but I don't know who they would rent the rest of the space to. Not the kind of neighborhood they could sublease to Dollar Tree. Would have been a good spot for a Petco? I'm guessing they decided to leave it alone for now because of the COVID situation. That would be a large scale remodel as they would have to move so much refrigeration to reduce the space; the kind of remodel that takes 6 months or more and disrupts sales dramatically. That Manager is no longer there.

What might be the saving grace for that store is the surprise announcement that Walmart is closing on Alton Pkwy on March 5th. So now if you live in the Quail Hill or Spectrum area your choices are Target which now has an inconvenient new parking garage, Whole Foods at Los Olivos (which clearly is underperforming drastically) or this Albertsons. With another 1900 apartments going up across from Los Olivos I don't see this Albertsons ever closing. It may be low volume but it is guaranteed to have comp sales increases every year for many years.
I think you have the Quail Hill location mixed up with Jeffrey/5 -- prior to its renovation, the Jeffrey/5 location carried much of the same product assortment as Pavilions. Quail Hill is considerably smaller (I'd guess it's less than 40K sq. ft.) and uses every inch of space fairly efficiently. Downsizing the store wouldn't make any sense -- the buildout to replace the lost infrastructure (e.g. refrigeration, etc.) would be in the millions. As it is, the store lacks sufficient space for bulk display of sale items (present in most other locations) and a pharmacy.

But I agree, Walmart's closure will have a material impact within the Spectrum area. I do disagree with you on Whole Foods -- while I don't shop there, it's challenging to find a parking spot to the point that some employees (within the shopping center) are required to park elsewhere and take a shuttle to the site.

That said, I don't think it'll have much of a positive impact on the Quail Hill location. Unless you live within Quail Hill, the parking lot makes it incredibly inconvenient to get into and out of. The whole shopping center seems to struggle -- most everything in there frequently flips. Even what was once a dentist office became a vet, then a real estate agency office, and now something else -- and the shopping center opened up only 15 years ago!

Time will tell!
Nope, I'm not mixing up the stores. They were looking at downsizing it and changing the banner to Pavilions. The right end of the store would have been where the reduction occurred. It's 43000 square feet and cutting off a space for a sublet would probably leave them with 30K which they could use more productively with different fixturing, less open floor stack space etc. And improve the profitability and sales per Sq ft... There is a lack of pet stores in the area so my guess is that they could have had a good offer from Petco. Or maybe someone like Ulta. Either would fit in a 12K space.

I live across the street from the Whole Foods and it is a definite under performer due to the terrible parking setup. They were overloaded with customers getting sandwiches and pizza slices clogging up all the parking, without a single full basket going through the registers. It's the kind of location an "Amazon Go" type store would do well in.

Both Los Olivos Marketplace and Quail Hill have the same bad design with one main entrance on a side street, but Irvine Company doesn't seem to learn.

Something strange is definitely happening with that Walmart closing. They just replaced all the lighting a couple months ago with new LED strips, not an easy job in a box with an extra high ceiling (must be over 30 ft.). But knowing Walmart and their ruthless pursuit of comp sales - if a store is negative comp they will close it, period. So when Target across I-5 was almost impossible to shop due to the parking structure construction that Walmart probably had skyrocketing sales increases. Now that the garage is done and Target did a full remodel they probably had a full negative comp year, and Walmart will not accept such performance. Couple that with the high likelihood that the lease was ready to move to the next term (usually each subsequent term has a graduated rent increase) and someone said pull the plug. When I saw the headline I thought it would be the store on Barranca across town - that place (the former Sam's) is a complete dump.

And as far as AtHome goes, they first opened up the hill at Foothill Ranch, and the store is a ghost town. They are a bottom feeder going after cheap leases and opportunities (like dead Kmart and Sports Authority buildings). Hobby Lobby goes after the same type of buildings. They both want boxes between 40K and 70K, and they need to get it dirt cheap. They both go in on buildings that have been vacant for several years, or buy leases for pennies on the dollar in bankruptcy court when the landlord isn't bidding on their own space. So you can make a bid on a lease that might be $75K a month and say you'll pay only $20K, and the BK court can approve it because the remaining deficit is still due and if the liquidation goes well the landlord may receive enough from the proceeds to make up the difference, and bonus does not have to pay for property improvements for the new tenant.

The Foothill building was half Babies R Us and half Sport Chalet - so AtHome got the leases in BK court then combined the boxes. They're taking the closed Kmart in Temecula, took a closed Sears Outlet in Carmel Mountain Ranch, and taking part of the closing Long Beach Kmart.

That Walmart is too big for AtHome and way too expensive, it never will happen. If Walmart can't afford it then they can't either. Those AtHome and Hobby Lobby stores do a staggeringly small amount of business - $3M to $5M a year - their high profit margins keep the lights on as long as the real estate is dirt cheap and they can keep labor under control. Brutal business.
Bagels
Assistant Store Manager
Assistant Store Manager
Posts: 823
Joined: August 20th, 2018, 11:54 pm
Has thanked: 1 time
Been thanked: 12 times
Status: Offline

Re: Albertsons closing Irvine, CA

Post by Bagels »

ClownLoach wrote: February 2nd, 2021, 8:51 pmNope, I'm not mixing up the stores. They were looking at downsizing it and changing the banner to Pavilions. The right end of the store would have been where the reduction occurred. It's 43000 square feet and cutting off a space for a sublet would probably leave them with 30K which they could use more productively with different fixturing, less open floor stack space etc. And improve the profitability and sales per Sq ft... There is a lack of pet stores in the area so my guess is that they could have had a good offer from Petco. Or maybe someone like Ulta. Either would fit in a 12K space.

I live across the street from the Whole Foods and it is a definite under performer due to the terrible parking setup. They were overloaded with customers getting sandwiches and pizza slices clogging up all the parking, without a single full basket going through the registers. It's the kind of location an "Amazon Go" type store would do well in.

Both Los Olivos Marketplace and Quail Hill have the same bad design with one main entrance on a side street, but Irvine Company doesn't seem to learn.

Something strange is definitely happening with that Walmart closing. They just replaced all the lighting a couple months ago with new LED strips, not an easy job in a box with an extra high ceiling (must be over 30 ft.). But knowing Walmart and their ruthless pursuit of comp sales - if a store is negative comp they will close it, period. So when Target across I-5 was almost impossible to shop due to the parking structure construction that Walmart probably had skyrocketing sales increases. Now that the garage is done and Target did a full remodel they probably had a full negative comp year, and Walmart will not accept such performance. Couple that with the high likelihood that the lease was ready to move to the next term (usually each subsequent term has a graduated rent increase) and someone said pull the plug. When I saw the headline I thought it would be the store on Barranca across town - that place (the former Sam's) is a complete dump.

And as far as AtHome goes, they first opened up the hill at Foothill Ranch, and the store is a ghost town. They are a bottom feeder going after cheap leases and opportunities (like dead Kmart and Sports Authority buildings). Hobby Lobby goes after the same type of buildings. They both want boxes between 40K and 70K, and they need to get it dirt cheap. They both go in on buildings that have been vacant for several years, or buy leases for pennies on the dollar in bankruptcy court when the landlord isn't bidding on their own space. So you can make a bid on a lease that might be $75K a month and say you'll pay only $20K, and the BK court can approve it because the remaining deficit is still due and if the liquidation goes well the landlord may receive enough from the proceeds to make up the difference, and bonus does not have to pay for property improvements for the new tenant.

The Foothill building was half Babies R Us and half Sport Chalet - so AtHome got the leases in BK court then combined the boxes. They're taking the closed Kmart in Temecula, took a closed Sears Outlet in Carmel Mountain Ranch, and taking part of the closing Long Beach Kmart.

That Walmart is too big for AtHome and way too expensive, it never will happen. If Walmart can't afford it then they can't either. Those AtHome and Hobby Lobby stores do a staggeringly small amount of business - $3M to $5M a year - their high profit margins keep the lights on as long as the real estate is dirt cheap and they can keep labor under control. Brutal business.
Many Irvine Company shopping centers, especially (relatively) newer ones, are designed so that access is unique. The new build shopping centers in Tustin are as well (it use to routinely take 10 minutes to get out of the property from In-N-Out and Chic-Fil-A), and I've long pondered if they have the same designer. But Quail Hill's problem is its location -- it's in a relatively isolated part of Irvine - cut off by the 405 & 133, surrounded by vacant land (that's been pledged not to be developed) and directly adjacent to Irvine's commercial district. I doubt a Pavilions would succeed at that site. I do believe an Asian supermarket would, and it would've made more sense for H-Mart to pick-up than the Alton location (that area is still mostly white; tons of wealthy Chinese families live in Quail Hill). However, it's likely still under lease to Albertsons for several more years, and the much larger Alton store will allow H-Mart to have a food hall. That said, when the lease is up in four years or so, I fully expect Albertsons to move out.

Walmart's closure is pretty untypical. Most store closings are announced in batches, surrounding an earnings call; the Irvine store is an isolated closure. I was in it the same day its closure was announced, and it was fully stocked -- grocery was fully stocked, all of the spring/summer merchandise was on display, and staff were constructing an Easter display (moving remaining V-Day's stock up front). In the past year or so, Walmart's invested in upgraded lighting and fixtures. And just hours after the announcement of the closure, Walmart immediately dived into a liquidation sale (closing the store for a day, cutting hours, etc.) Often, Walmart will wait for one or more weeks, allowing inventory levels (especially perishables) to drop.

Word is Walmart was expecting to renew the lease, but Irvine Company didn't want them as a tenant. IC has a long history of not including options within its leases. Remember Harry Shuster? He leased a ton of land for a safari park, then sub-leased it as an amphitheater & water park. After the initial term expired, IC refused to renew his lease, and he sued saying options were such a standard that they were a given. Guess who won? You probably live on his land.

You're right, Walmart's replacement probably won't be athome, but I'm certain they have a roster of tenants lined up -- they always do, vacancies never last. Even the Office Max that was adjacent to the Walmart flipped almost over night.
ClownLoach
Valued Contributor
Valued Contributor
Posts: 2689
Joined: April 4th, 2016, 10:55 pm
Has thanked: 39 times
Been thanked: 289 times
Status: Offline

Re: Albertsons closing Irvine, CA

Post by ClownLoach »

Bagels wrote: February 4th, 2021, 6:39 pm
ClownLoach wrote: February 2nd, 2021, 8:51 pmNope, I'm not mixing up the stores. They were looking at downsizing it and changing the banner to Pavilions. The right end of the store would have been where the reduction occurred. It's 43000 square feet and cutting off a space for a sublet would probably leave them with 30K which they could use more productively with different fixturing, less open floor stack space etc. And improve the profitability and sales per Sq ft... There is a lack of pet stores in the area so my guess is that they could have had a good offer from Petco. Or maybe someone like Ulta. Either would fit in a 12K space.

I live across the street from the Whole Foods and it is a definite under performer due to the terrible parking setup. They were overloaded with customers getting sandwiches and pizza slices clogging up all the parking, without a single full basket going through the registers. It's the kind of location an "Amazon Go" type store would do well in.

Both Los Olivos Marketplace and Quail Hill have the same bad design with one main entrance on a side street, but Irvine Company doesn't seem to learn.

Something strange is definitely happening with that Walmart closing. They just replaced all the lighting a couple months ago with new LED strips, not an easy job in a box with an extra high ceiling (must be over 30 ft.). But knowing Walmart and their ruthless pursuit of comp sales - if a store is negative comp they will close it, period. So when Target across I-5 was almost impossible to shop due to the parking structure construction that Walmart probably had skyrocketing sales increases. Now that the garage is done and Target did a full remodel they probably had a full negative comp year, and Walmart will not accept such performance. Couple that with the high likelihood that the lease was ready to move to the next term (usually each subsequent term has a graduated rent increase) and someone said pull the plug. When I saw the headline I thought it would be the store on Barranca across town - that place (the former Sam's) is a complete dump.

And as far as AtHome goes, they first opened up the hill at Foothill Ranch, and the store is a ghost town. They are a bottom feeder going after cheap leases and opportunities (like dead Kmart and Sports Authority buildings). Hobby Lobby goes after the same type of buildings. They both want boxes between 40K and 70K, and they need to get it dirt cheap. They both go in on buildings that have been vacant for several years, or buy leases for pennies on the dollar in bankruptcy court when the landlord isn't bidding on their own space. So you can make a bid on a lease that might be $75K a month and say you'll pay only $20K, and the BK court can approve it because the remaining deficit is still due and if the liquidation goes well the landlord may receive enough from the proceeds to make up the difference, and bonus does not have to pay for property improvements for the new tenant.

The Foothill building was half Babies R Us and half Sport Chalet - so AtHome got the leases in BK court then combined the boxes. They're taking the closed Kmart in Temecula, took a closed Sears Outlet in Carmel Mountain Ranch, and taking part of the closing Long Beach Kmart.

That Walmart is too big for AtHome and way too expensive, it never will happen. If Walmart can't afford it then they can't either. Those AtHome and Hobby Lobby stores do a staggeringly small amount of business - $3M to $5M a year - their high profit margins keep the lights on as long as the real estate is dirt cheap and they can keep labor under control. Brutal business.
Many Irvine Company shopping centers, especially (relatively) newer ones, are designed so that access is unique. The new build shopping centers in Tustin are as well (it use to routinely take 10 minutes to get out of the property from In-N-Out and Chic-Fil-A), and I've long pondered if they have the same designer. But Quail Hill's problem is its location -- it's in a relatively isolated part of Irvine - cut off by the 405 & 133, surrounded by vacant land (that's been pledged not to be developed) and directly adjacent to Irvine's commercial district. I doubt a Pavilions would succeed at that site. I do believe an Asian supermarket would, and it would've made more sense for H-Mart to pick-up than the Alton location (that area is still mostly white; tons of wealthy Chinese families live in Quail Hill). However, it's likely still under lease to Albertsons for several more years, and the much larger Alton store will allow H-Mart to have a food hall. That said, when the lease is up in four years or so, I fully expect Albertsons to move out.

Walmart's closure is pretty untypical. Most store closings are announced in batches, surrounding an earnings call; the Irvine store is an isolated closure. I was in it the same day its closure was announced, and it was fully stocked -- grocery was fully stocked, all of the spring/summer merchandise was on display, and staff were constructing an Easter display (moving remaining V-Day's stock up front). In the past year or so, Walmart's invested in upgraded lighting and fixtures. And just hours after the announcement of the closure, Walmart immediately dived into a liquidation sale (closing the store for a day, cutting hours, etc.) Often, Walmart will wait for one or more weeks, allowing inventory levels (especially perishables) to drop.

Word is Walmart was expecting to renew the lease, but Irvine Company didn't want them as a tenant. IC has a long history of not including options within its leases. Remember Harry Shuster? He leased a ton of land for a safari park, then sub-leased it as an amphitheater & water park. After the initial term expired, IC refused to renew his lease, and he sued saying options were such a standard that they were a given. Guess who won? You probably live on his land.

You're right, Walmart's replacement probably won't be athome, but I'm certain they have a roster of tenants lined up -- they always do, vacancies never last. Even the Office Max that was adjacent to the Walmart flipped almost over night.
Anchors in spaces of this size like Walmart will not enter a lease without a minimum of 20 years term guaranteed, usually 20 plus two 5 year renewals. There however is an increase at the 10 year mark. I'm very familiar with the Irvine Company and how they handle these. Irvine Company for some reason has a false perception in the public as a draconian organization that will throw tenants out on the street. It doesn't work that way. I work with many landlords on large retail stores across OC and SD and I can tell you they're the most supportive and cooperative company we have worked with and not even close to most expensive. BUT most of their leases start low for the first term, many times below market, with an escape clause at start of second term where a large increase sets in. I have some connections on this one I reached out to and all I can say is this was a very last minute decision, and as surprising as it may sound for Irvine area shrink was the deciding factor. Locations like this at major freeway interchanges are prone to Organized Retail Crime rings - easy escape in multiple directions. Increasing shrink losses plus a rent increase due on next term = a closing store in the Walmart organization.
veteran+
Valued Contributor
Valued Contributor
Posts: 2233
Joined: January 3rd, 2015, 7:53 am
Has thanked: 1202 times
Been thanked: 71 times
Status: Offline

Re: Albertsons closing Irvine, CA

Post by veteran+ »

Well I have heard pretty awful things about Irvine and they are pretty rigid.

I have first hand experience with them regarding apartment complexes. I will never rent from them again, that's for sure.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Albertsons closing Irvine, CA

Post by storewanderer »

ClownLoach wrote: February 5th, 2021, 9:47 pm I have some connections on this one I reached out to and all I can say is this was a very last minute decision, and as surprising as it may sound for Irvine area shrink was the deciding factor. Locations like this at major freeway interchanges are prone to Organized Retail Crime rings - easy escape in multiple directions. Increasing shrink losses plus a rent increase due on next term = a closing store in the Walmart organization.
I can see how this could be a problem. If the store was smaller than a typical Supercenter, perhaps did a higher volume of grocery than a typical Supercenter, then did less volume of non-food sales than a typical Supercenter (likely due to size alone), but managed to have shrink similar to a typical Supercenter, that would not be a great formula for profitability. Add on the rent increase as you say and that is pretty much the end.

It isn't unusual to see Wal Mart close stores that have had recent updates. I think within the Wal Mart Organization there must be some kind of a disconnect between the group that updates stores (who must be looking at sales volume as a basis for decisions) and the group that considers stores for closure. It isn't often these Wal Mart Stores close due to lack of customers, it is usually for other reasons.
HCal
Assistant Store Manager
Assistant Store Manager
Posts: 612
Joined: February 1st, 2021, 11:18 pm
Has thanked: 21 times
Been thanked: 67 times
Status: Offline

Re: Albertsons closing Irvine, CA

Post by HCal »

In the end, I feel like Irvine simply doesn't have the right demographics for Walmart. Walmart appeals to middle- and low-income families, and tin many markets their shoppers skew Hispanic and/or African-American. Wealthy Asians and whites may simply not be interested in Walmart when there are plenty of other options available, including ethnic supermarkets and higher-end general stores.

Walmart is one store that I am not sad to see shut down, because I think they are too powerful already.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Albertsons closing Irvine, CA

Post by storewanderer »

HCal wrote: February 6th, 2021, 3:05 pm In the end, I feel like Irvine simply doesn't have the right demographics for Walmart. Walmart appeals to middle- and low-income families, and tin many markets their shoppers skew Hispanic and/or African-American. Wealthy Asians and whites may simply not be interested in Walmart when there are plenty of other options available, including ethnic supermarkets and higher-end general stores.

Walmart is one store that I am not sad to see shut down, because I think they are too powerful already.
I don't know. Every Wal Mart I've ever been around in California is packed with customers including whites, Asians, Hispanics, and African Americans. In the bay area they are absolutely packed with customers of various ethnic groups especially Asians. However what they are buying at Wal Mart may make a difference in store profitability. They may be buying low margin packaged foods, home consumables (cleaning, etc.), etc. but not interested in the clothing or soft home goods that Wal Mart has and that certainly impacts margin.

It seems like in California when a Wal Mart closes, it isn't due to lack of customers. It is due to shrink, "plumbing problems," or other unrelated things. This Irvine closure with 250 employees in a 135k square foot store pretty much says the store was doing very high volume as there are larger Supercenters that do not have that many employees (though there are also larger Supercenters that have twice that many employees).
klkla
Posts: 1614
Joined: February 24th, 2009, 3:26 pm
Been thanked: 2 times
Status: Offline

Re: Albertsons closing Irvine, CA

Post by klkla »

There has to be something more to this story. WalMart has had their publicity department contact every major media company in SoCal to spread the word that the store was under performing yet there is evidence from posters on this site that this is simply not the the case. I would love to know what the truth is about this situation. I think we will know that as soon as the next tenant(s) open in the space.
storewanderer
Posts: 14379
Joined: February 23rd, 2009, 3:54 pm
Has thanked: 2 times
Been thanked: 298 times
Contact:
Status: Offline

Re: Albertsons closing Irvine, CA

Post by storewanderer »

klkla wrote: February 6th, 2021, 10:07 pm There has to be something more to this story. WalMart has had their publicity department contact every major media company in SoCal to spread the word that the store was under performing yet there is evidence from posters on this site that this is simply not the the case. I would love to know what the truth is about this situation. I think we will know that as soon as the next tenant(s) open in the space.
If another tenant opens quickly it could simply be someone else was willing to pay more for the space or there was some other negotiation issue. Shrink, sales mix, "plumbing problems" - who knows.

Could Target want the space?

They have operated stores close together in dense areas before (see: Daly City, CA).
Post Reply