In talking with Daniel Herrold, a senior director of Stan Johnson Co., there is plenty of demand from various types of retailers including Burlington, TJ Maxx, Ross Stores, Party City, Michaels, Hobby Lobby, and various fitness chains for that size space, but he still sees some backfill challenges in retails future. Check out the Q&A below to learn more on the subject.

GlobeSt.com: Toys 'R' Us just filed bankruptcy, which some say could mean store closings. How will this affect the market?

Daniel Herrold: I don't see this being overly problematic. Where we are seeing challenges in backfilling vacant space is in the larger department store prototypes – sizes of 100,000 to 200,000 square feet and greater, from the likes of Sears, Kmart, and others. There's simply not that much demand from users in that size range. But for stores in the 20,000 to 40,000-square-foot range, which is the typical Toys 'R' Us footprint, there is strong demand from various types of retailers including Burlington, TJ Maxx, Ross Stores, Party City, Michaels, Hobby Lobby, and various fitness chains. If and when Toys 'R' Us decides to close stores, assuming the real estate is of quality, this will create opportunity for many of the growing retailers.

GlobeSt.com: Why would these tenants consider leasing existing vacancies, rather than constructing their own new building?

Herrold: In many cases, the vacancies that we're seeing are good retail locations, and big boxes are often generic and not tenant-specific. It is prudent for growing retailers to evaluate these existing opportunities as they arise, since there may be barriers otherwise to add a location in these trade corridors. Additionally, occupancy costs are generally lower than a build-to-suit, and in many cases the existing landlords are eager to re-lease and may offer a healthy tenant improvement package to entice retailers to fill the space.

GlobeSt.com: Many think a situation like Toys 'R' Us could indicate trouble in general. What are your thoughts?

Herrold: No–the collapse of brick and mortar retail is fake news! Even though online sales are growing, we've seen plenty of evidence that retailers still need to provide a customer experience through physical locations. Additionally, there are indications to support continued physical store growth as there are far more expansions occurring this year than closures.

GlobeSt.com: Toys 'R' Us just filed bankruptcy, which some say could mean store closings. How will this affect the market?

GlobeSt.com: Why would these tenants consider leasing existing vacancies, rather than constructing their own new building?

GlobeSt.com: Many think a situation like Toys 'R' Us could indicate trouble in general. What are your thoughts?

Instant Insights /

Who Will Backfill Any Available Toys 'R' Us Space?

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