Barry Bain, CCIM
Director, GRS | Centaur
(630) 690-4335
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It’s hard to keep up with the many happenings in the retail sector of commercial real estate, but a few big transitions have recently taken place, and investors need to be aware of their potential impact.
Barnes & Noble
The lone major national chain of bookstores, Barnes & Noble, has announced that it will size down the square footage of its stores. Though the retailer’s spaces average 26,000 square feet, it is looking at locations as small as 10,000 square feet, evidenced by a new unit in Plano, Texas. Fortune reports that about 20 percent of the chain’s 632 stores come up for lease renewals in the next year. Expect store closures, especially after a second-quarter net loss of $30.1 million, and a same-store sales drop of 6.3 percent year over year.
This move follows Amazon’s slow opening of its brick-and-mortar Amazon Books chain. Those locations average around 5,000 square feet.
Buffalo Wild Wings
In a wild move, fast-food chain Arby’s dropped $2.4 billion on Buffalo Wild Wings. The latter has about 1,250 units, while its buyer has about 3,300.
Rising chicken prices have reportedly hurt Wild Wings, which saw a 19.7-percent decrease in net earnings during the third quarter, while same-store sales fell 2.3 percent at company-owned locations and 3.2 percent at those that are franchised. It has about 30 new domestic restaurants planned for 2017.
Franchise Business Services, which represents a lion’s share of Wild Wings franchisees, reportedly backs the deal and has confidence in Arby’s CEO Paul Brown.
Chipotle Mexican Grill
In other food news, Chipotle Mexican Grill’s founder and CEO Steve Ellis has stepped down. The move comes after a food-poisoning issue that has plagued the company’s sales. Meanwhile, some have talked about the chain’s overexpansion as well.
However, Chipotle has not fared badly from a financial standpoint this year. For its first fiscal nine months, same-store sales rose 8.3 percent year over year. Third quarter net income more than doubled, at $19.6 million over the same period a year ago, and Chipotle opened 145 new locations over the nine months.
Investors seem to like the change in leadership because the chain’s stock has risen since the news was announced. It’s currently trading at a not-too-shabby $315 per share, showing that Chipotle’s future is likely pretty solid.
About GRS Group
GRS Group is a leading provider of commercial real estate (“CRE”) services worldwide. With offices across the United States, Europe, and affiliates around the globe, GRS Group provides local market knowledge with a global perspective for institutional real estate investors, occupiers and lenders worldwide. The GRS Group team has evaluated and advised on over $1 trillion in CRE transactions.
Through the company’s proprietary management process, Global Services Connection, GRS Group delivers an integrated suite of services including Financial Advisory, Transaction Management, Assessment and Title Insurance. We provide a single point of contact, capable of leveraging the GRS Group portfolio of companies and delivering customized solutions to assist our clients in achieving their investment goals.