Retail closures create opportunities for expanding businesses

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21-04-2025

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From party supplies to apparel, recent retail bankruptcies and consolidations have led to liquidation sales across the Sacramento area.
From party supplies to apparel, recent retail bankruptcies and consolidations have led to liquidation sales across the Sacramento area.
That's good for consumers looking for a deal. But on the surface, it doesn't sound like encouraging news from a real estate standpoint.
The resulting vacancies are significant.
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Party City closed its six stores in the Sacramento area, ranging in size from about 9,000 to 18,800 square feet. Fabric and crafts retailer Joann Inc. is also closing six local stores, ranging from about 12,000 to 35,000 square feet.
That's in addition to the eight recent Big Lots closures in the area, and 11 local closures of 99 Cents Only Stores.
Not to mention the growing list of drugstores and apparel chains that are also shutting stores. Macy's Inc. (NYSE: M) recently closed sites in Citrus Heights and Downtown Sacramento, while Kohl's Corp. (NYSE: KSS) closed a location near Arden Fair mall. At press time, Forever 21 was winding down operations in Arden Fair after closing a site in the Folsom Premium Outlets.
But the situation might not be as dire as it seems.
"It's challenging, but weirdly enough, it hasn't quite hit our vacancy numbers yet," said Garrick Brown, vice president of research for Roseville-based Gallelli Real Estate.
That's because several types of tenants — from discounters to indoor entertainment centers — are still expanding and are ready to fill big-box vacancies. Locally, some of those leases have already been inked.
Here's what could fill other spaces vacated by big-box retail chains — and what might derail those plans.
What makes an empty big-box space appealing
Some signs point to empty big-box spaces getting filled quickly.
Brown cited a slowdown in new retail construction. In the Sacramento area and beyond, there aren't a lot of new retail centers being built. So it's natural for expanding companies to look at existing spaces.
Location is also a major factor. Sometimes, retail chains close clusters of underperforming stores, which often operate in less-than-ideal locations. Recent closures from Party City and Joann Inc. played out differently.
As part of a national series of closures, party supply retailer Party City closed all its stores in the Sacramento region, including locations in prime retail centers such as Folsom's Broadstone Marketplace.
The same is true for fabric and crafts retailer Joann, which is shutting its six Sacramento-area stores as part of a national series of closures. Many of those sites are also in high-traffic locations, including the recently redeveloped Sunrise Village retail center in Citrus Heights.
A lack of new retail construction, combined with available space in some busy shopping centers, creates a business opportunity for tenants. Many are ready to take the leap.
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Joann Inc. is closing its six Sacramento-area locations, creating an opportunity for expanding retailers.
Sonya Sorich | Sacramento Business Journal
Companies likely to fill big-box retail spaces
Looking at the retail landscape, Brown said he's not worried about spaces of 20,000 to 30,000 square feet getting filled. That range is consistent with many of the former Party City and Joann spaces in the Sacramento area.
Multiple off-price apparel chains are in expansion mode, according to Brown, who cited Burlington (NYSE: BURL) as an example. That retailer has already confirmed plans to fill a former Big Lots space in the area. Burlington will replace Big Lots in Watt Towne Center in North Highlands. The store at 3615 Elkhorn Blvd. is expected to open in July, the Business Journal previously reported.
Outdoor goods retailer Sierra is another off-price apparel retailer that's expanding, Brown said. It appears Sierra, which is part of the TJX Companies Inc. (NYSE: TJX) portfolio, is planning stores in Roseville and Davis. Though the company hasn't confirmed those locations, leasing materials show Sierra will fill a former PetSmart space in Roseville and a former OfficeMax space in Davis.
Other types of discounters are also scooping up recent retail vacancies. In a recent liquidation sale, two discounters — Five Below Inc. and Dollar Tree Inc. — claimed lease rights for some local Party City sites.
Five Below (Nasdaq: FIVE) could fill a former Party City space in Woodland and Dollar Tree (Nasdaq: DLTR) could fill former Party City spaces in Folsom and Roseville.
Dollar Tree also filled two former 99 Cents Only Stores locations in the Sacramento area, and is planning to fill a former Walgreens space near Placerville. Though the specific brand isn't known, a discounter is also slated to replace a former Rite Aid store in Cameron Park.
Brown said small-format grocery chains, such as Trader Joe's and Sprouts Farmers Market, are expanding as well. Trader Joe's filled a former 99 Cents Only space on Fairway Drive in Roseville.
Brown cited health-related tenants as other possible candidates to fill retail vacancies. He listed veterinary clinics, dialysis centers and plasma donation centers as examples. Florida-based CSL Plasma recently opened a location in a former Dollar Tree space at 1895 Howe Ave. in Arden-Arcade.
And despite the challenges they faced during Covid-19, gyms are still growing, according to Brown.
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Dollar Tree could fill the former Party City location in Folsom's Broadstone Marketplace.
Sonya Sorich | Sacramento Business Journal
More candidates for big-box spaces — and some obstacles
Other big-box spaces across the Sacramento area are getting new futures, too. Harbor Freight Tools is moving forward with plans to fill a former 99 Cents Only space on Douglas Boulevard in Roseville, according to city records. Owners of separate Latino grocery stores bought two other former 99 Cents Only locations in the region.
Meanwhile, various operators still see an opportunity for entertainment-related businesses in former retail spaces. Brown said he understands why those concepts are expanding. "People need a place to socialize," he said.
A supersized example: Dick's Sporting Goods Inc. (NYSE: DKS) is bringing its Dick's House of Sport concept to the former Sears anchor property at Arden Fair in Sacramento. Unlike the company's typical retail stores, Dick's House of Sport locations include immersive elements such as a rock-climbing wall, batting cage and golf simulators.
Late last year, Altitude Trampoline Park — an entertainment chain from Texas — opened in a former Walgreens building in Folsom. A different trampoline park, known as Fun City, plans to fill a former 99 Cents Only space in Rancho Cordova and a former Big Lots site in Citrus Heights.
Ace Pickleball Club has announced plans to open in a former Big Lots space in Folsom. Expected to open in the fall, it will be the first local site for the franchise chain from Georgia.
But some entertainment-related businesses come with risks, including expanding too quickly, according to Brown. "Something gets hot and we just overdo it," he said.
In addition, Brown said tenants such as indoor playgrounds might ultimately be drawn to "quasi-industrial" areas rather than big-box retail spaces — because the rent might be cheaper.
While tenants are lined up for several recent big-box vacancies, plans for the remaining storefronts are still unclear. Nate Giwoff, CEO of GQNorth Real Estate, said a deal is in the works for the former 99 Cents Only space in Folsom. Giwoff handles leasing for Walmart Central, the retail center on Riley Street that includes the space. He didn't elaborate on the potential new tenant in Folsom.
Even as Brown listed retailers that are expanding, he said there are factors that could impact those plans — chiefly, uncertainty surrounding the national economy. Observers have said an economic slowdown could lead to reduced retail leasing activity.
"Chaos comes with a price," Brown said.
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Altitude Trampoline Park has opened in a former Walgreens space at 1100 Riley St. in Folsom.
Sonya Sorich | Sacramento Business Journal