Retail Watchers

ALDI has just signed a lease for a whopping 42,000 square feet in Wayne, NJ, which is much larger than any of their other stores around here. Any ideas of what they’re using the space for? A weirdly large ALDI? A new prototype with a deli or a bakery or something? Storage? E-commerce? Offices? Winn-Dixie in NJ?! I assume it’s not some new prototype, because why choose some random strip mall in NJ for that?

https://t.co/0PFH1YtBlL

marketreportblog wrote: ↑December 17th, 2023, 8:09 pm ALDI has just signed a lease for a whopping 42,000 square feet in Wayne, NJ, which is much larger than any of their other stores around here. Any ideas of what they’re using the space for? A weirdly large ALDI? A new prototype with a deli or a bakery or something? Storage? E-commerce? Offices? Winn-Dixie in NJ?! I assume it’s not some new prototype, because why choose some random strip mall in NJ for that?

https://t.co/0PFH1YtBlL

I doubt it's Winn Dixie because that sale has neither been approved or finalized yet. Aldi may just be looking for another expansion vehicle, or they may have been forced to take the whole spot and sublease themseves.

The idea of opening a new Winn-Dixie in NJ is just hilarious. There are plenty of snowbirds there and they probably know to avoid W-D like the plague.

I was joking about Winn-Dixie... mostly. It's possible ALDI does want some form of more mainstream, full-service supermarket format but I don't see any good reason for them to be introducing it in this part of NJ. My money is on some form of sublease, offices, or extra storage space.

marketreportblog wrote: ↑December 21st, 2023, 11:08 am I was joking about Winn-Dixie... mostly. It's possible ALDI does want some form of more mainstream, full-service supermarket format but I don't see any good reason for them to be introducing it in this part of NJ. My money is on some form of sublease, offices, or extra storage space.

Sublease or leased dead space is very common. My last company had an average store size around 25-30K but would lease up to 45K if they were desperate enough for a location and other options had not appeared. In nearly every case the excess space was left unfinished except for basic emergency exit lighting and fire sprinklers per code, and otherwise walled off only accessible from the front or back. As space is reused or repurposed this is becoming much more common. In the case of this center it is apparent that the site was intended for a large retailer who obviously pulled out or went under but the space was either already under construction or there is some other regulation, permit issue etc. preventing a complete rework of the site plan.

Usually logistics prevent the subleasing of space. Sometimes the cost of reconfiguring the loading dock, adding another dock, and plumbing for restrooms and other facilities is too high. All those costs fall on the tenant who would perform the sublease. I've personally leased a site where the cost to do this work was equal to the estimated income for 15 years of rent the space would receive, so we didn't sublease and just had extra space that could be used for storage if needed.

The new South Temecula Aldi is nearing completion, and it is now visible that it is just like this other oversized location. It took over a Bassett furniture store and has drywalled off dead space to the left, and built a proper block wall to subdivide and create a leaseable space to the right. The space is about 35K but the actual portion of the building the store will use is not an inch larger than a typical prototype Aldi. I'm guessing the space that will become available for rent is about 10K, and the "waste" space is probably 5K or so and very skinny. Aldi could have chosen to make very nice, wide aisles in this store instead but that probably would have translated to additional utilities, build out expense, labor (more footsteps) etc. And that is why they would rather wall off a portion of the building never to see the light of day instead.