(Credit: Google Maps Street View)
Properties left behind by Party City a hot commodity, at present
Dollar Tree has snapped up the former Party City location on Witchwood Drive in the Montgomery Square Shopping Center off Knapp Road in Montgomery Township.
Dollar Tree and Five Below acquired former Party City locations at a recent auction, scooping up a total of 148 leases from the retail chain's bankruptcy proceedings, according to CoStar.
The transfer was approved on Feb. 21. See the documents here. The deal includes 148 stores for $1 million upfront, with an additional $65,000 for each lease agreement beyond 10 leases.
These prime spaces are seen as valuable real estate in the current tight retail market, with Party City having auctioned off 250 properties in total, according to CoStar.
Other retailers, such as Rack Room Shoes, Barnes & Noble, and La-Z-Boy, also bid for available properties. The properties being sought range in area between 10,000 and 15,000 square feet.
The shift in retail space usage highlights a growing trend where well-located properties, like those left behind by Party City, are in high demand, despite the wider retail closures.
Experts claim the halted construction of mid-sized big-box stores in recent years as one factor of the scarcity.
The vacancy rate for U.S. retail space is currently just 4.1%, making these properties even more coveted, per the article.
According to the report, Dollar Tree has opened more than 500 new stores in the past year and plans to open 600 more, while Five Below also continues to expand, opening more than 80 locations in its third-quarter Fiscal Year.
The auction preceded the $20 million sale last week of Party City’s intellectual property and wholesale operations to New Amscan, an affiliate of Ad Populum, which sells pop culture goods and costumes globally.
“We’ve seen the uptick in closures and bankruptcies, but the flip side we’ve seen that really strong demand to backfill that space, at least where it’s well-located and not cannibalizing the existing footprint of retailers,” Brandon Svec, national director of US retail analytics at CoStar, told Retail Brew.
The types of properties left behind by Party City are a hot commodity right now, Svec said, in part because new construction of mid-sized big box stores ground to a halt in recent years.
Bill Lenaz, retail leasing specialist at Jeffery Realty Inc., told Retail Brew that he expects these properties to find tenants quickly due to tight supply.
According to Retail Brew, it also helps when a key retail sector is in expansion mode.
Brian Schuster, leasing agent at Ripco Real Estate who manages a Party City location in Long Island, told Retail Brew that a landlord of the surrounding shopping center bid for the property in order to keep it away from a discounter such as Dollar Tree.
According to the report, bringing in Dollar Tree would have meant the landlord could collect rent immediately.
Party City announced its immediate closure and layoffs of its staff, without severance, on Dec. 20.
