Starbucks: Easy Re-Leasing?

The closing of hundreds of stores by one chain normally should be the equivalent of minor earthquake for real estate professionals. But major brokers are responding to Starbucks’ shuttering of 600 units with “So what?”

The 600 closing stores represent just about 3% of Starbucks’ units in the United States, hardly a sign of abject failure, all note. And that means that re-leasing the units shouldn’t be too difficult.

“It’s much ado about nothing,” said Jim Sakanich, a senior vice president of CB Richard Ellis, Bannockburn, IL. “The one thing I would say is that they always pick really good real estate, and good real estate won’t be hard to get rid of.”

A number of uses could take the locations, which can vary from 1,000 square feet to 1,500 square feet. The most obvious would be a food use.

“Typically, Starbucks has leased some prime locations. The backfill would be other coffeehouses” such as Peet’s said Richard Wolf, a senior vice president of Madison Marquette Retail Services, Los Angeles.

In New York City, another possibility is Pret-A-Manger, the London-based sandwich shop that first entered the city a decae ago, said Faith Hope Consolo, chairman of locally based. Prudential Douglas Elliman Retail Services. The firm is working on re-leasing a couple of Starbucks locations in the city.

“They’ve announced 36 locations in New York City, four times what they have now,” Consolo said. “They think they could be on every corner. And they’re a great fit for another reason – they fit right into the space.”

Other possible food uses include Dunkin Donuts or Subway, though some landlords might look for more upscale tenants such as frozen dessert shops Red Mango, Pinkberry or even local favorite Tasti D Lite. Other possibilities are bakeries and wine shops.

Some say McDonalds might even be a possibility, though Sakanich discounts that idea.

“That customer is more budget-conscious,” he said.

Other possibilities include financial services or nonfood retailers. Regardless of what retailer ultimate gets the please, most landlords will have been more than happy to take back the space.

“The landlords were tortured by those leases,” Consolo said. “If they can turn it around and make a deal, they’ll do it.”

“To shake out a few hundred stores nationally and internationally is healthy and appropriate,” Wolf said. “The backfill is a tremendous opportunity – the basic work such as electricity already been done.”

And, all say, don’t worry too much about Starbucks.

“This means that 97% of the time you’re getting it right,” Sakanich said. “That puts you in the Hall of Fame.”