Dollar Stores to Vacate 3.8 Million Square Feet of SoCal Retail

About 3.8 million square feet of retail space in Southern California will soon be available due to the liquidation of 99 Cents Only Stores, which recently filed for bankruptcy. Despite past trends of struggling retail real estate markets post-bankruptcy, brokers believe these vacancies will be filled relatively easily due to the prime locations of the stores.

Unique Real Estate Opportunity

99 Cents Only cited pandemic-related financial troubles, inflation, and theft as reasons for its liquidation, which will affect all 371 stores, with 164 in Southern California. The stores fall into the "junior box" category, ranging between 15,000 and 30,000 square feet, with an average size of 23,000 square feet. Low vacancy rates for stores of this size present an opportunity for landlords to negotiate competitive leases and potentially increase rents.

Accelerated Closure Timeline

Despite an accelerated closure timeline by the end of May, real estate professionals anticipate a swift backfilling of the vacated spaces. The Southern California retail market appears prepared for the influx, with low overall vacancy rates reported in recent quarters. Numerous investors and retailers have expressed interest in acquiring or utilizing the vacated spaces, indicating a robust market demand.

Dollar Store Industry Challenges

The closure of 99 Cents Only Stores reflects broader challenges within the dollar store industry, including increased competition and financial strain. The closure of discount retailers like 99 Cents Only Stores poses challenges for underserved areas, potentially exacerbating food deserts and limiting access to affordable groceries. While the closure presents short-term challenges, the long-term impact on communities reliant on affordable goods remains uncertain unless similar retailers fill the void.