Wednesday, January 27, 2016

Mom & Pop Tenants, Reconsidered

It began in a small health food store in Austin, Texas; a sporting goods store in New York City; and a general store in Arkansas. While the names may be different, many powerhouses in retailing today have their origins in the “Mom & Pop” stores of yesteryear.

And yet, in today’s retail environment, Mom & Pop stores are often overlooked - and perhaps under-appreciated - by retail landlords. The reasons why could be debated endlessly, but one can make a strong case that the value of Mom & Pop stores should be assessed more carefully. After all, a long time ago, the three retailers mentioned above, better known as Whole Foods, Abercrombie & Fitch and Wal-Mart, were not the retail aristocracy that they are today.

At KeyPoint Partners, we maintain a database, of more than 265 million square feet of retail space encompassing 60,000 storefronts and more than 33,000 unique tenants in Eastern Massachusetts, Southern New Hampshire and Greater Hartford - our unique, proprietary GRIIDTM.  According to the most current GRIIDTM data, the top 10 retail tenants by square footage occupy 18.3% of the total retail space of the market, but only 1.3% of the total storefronts.

On the other hand, Mom & Pop stores (defined for this purpose as those operating one store and not affiliated with a larger chain or franchise) occupy 30,465 storefronts and 27.4% of the retail space within these three regions and a whopping 50.7% of all retail storefronts. The table below outlines the top ten retailers in the GRIIDTM database by square footage and number of storefronts, compared with single-store retailers:

Mom & Pop stores are unquestionably the largest segment of the GRIIDTM database, while smaller, multi-store retailers operating two to five stores constitute only 11% of all retail stores. As a result, Mom & Pop stores have a dramatic impact on a host of salient retail real estate issues such as vacancy rates, rental income, and property valuations.

Apart from sheer numbers, these one-of-a-kind retailers can add value to a property by enhancing the quality of a center. By their very nature, Mom & Pop stores create uniqueness, are constantly re-defining their originality, deliver a high quality customer experience to shoppers, and create diversity within the tenant mix.  Mom & Pop stores often occupy second-generation spaces, and often, the most challenging spaces in shopping centers.

Furthermore, from a leasing standpoint, negotiations with Mom & Pop retailers are often simpler, less capital-intensive, and typically less protracted.  An independent retailer’s decision to open (or close) stores is not tied to Wall Street, not dependent upon chainwide performance, and not linked to anything other than the merchant’s own ambition and availability of capital.

Landlords, brokers, and developers should take advantage of the opportunity to support local businesses, and enhance shoppers’ experience of their centers, by cultivating relationships with Mom & Pop stores. This year, when looking at merchandising plans and vacancies within your portfolio, why not consider the significance of Mom & Pop stores. Perhaps you can be the one to provide them with the opportunity of becoming the retail leaders – the Whole Foods, Abercrombie & Fitches, and Wal-Marts - of tomorrow.

Michael Branton, Senior Associate

In this issue we welcome a new contributor to our Commentary section: Michael A. Branton joined us in 2006, focusing on urban retail, shopping center leasing and tenant representation.  Mr. Branton graduated from Gettysburg College with a B.A. in History and Spanish and has a certificate in Commercial Real Estate from Boston University. He holds Real Estate Broker licenses in MA, RI, CT, NH, ME, and NY, and is an active member of the New Hampshire ICSC Next Generation Committee.


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New Business: New Property Management assignment: Barry Price Rehabilitation Center, a 52,000 s/f multi-tenanted office building in Newton, MA...New Leasing Assignment: Whistlestop Mall, a 10,351 s/f property on Railroad Ave. in Rockport, MA. Sr. Associate Michael Branton is handling leasing.


The Commerce Department reported that December retail sales fell 0.1% from November and rose 2.2% compared to December 2014, while the National Retail Federation reported that December sales, which exclude automobiles, gas stations, and restaurants, dropped 0.2% compared to November and rose 3.1% on an annual basis.. Among retailers reporting monthly comp-store sales, L Brands was up 8%, Gap was down 5.0%, Rite Aid was up 0.8%, and Costco sales rose 3%. See our sales reports below...American Apparel received unanimous approval for reorganization, but also received a $300 million buyout offer from an investor group that has the support of ousted CEO Dov Charney. The American Apparel board rejected the offer...Chipotle will close all of its stores for several hours on Feb. 8 to train its staff in food safety. The move occurs after several outbreaks of E. Coli in 9 states, and norovirus outbreaks CA and Boston. Chipotle has 1,931 US stores.


Ashland Inc. has signed an agreement to acquire OCH International, Inc. (Oil Can Henry’s), which operates and franchises 89 quick-lube stores in 6 states. The addition of Oil Can Henry’s will complement Ashland’s Valvoline Instant Oil Change network of 940 stores...Wingstop Inc. announced a 35-unit development agreement with Sizzling Platter, a restaurant management company, which will allow Wingstop to expand its footprint along the East Coast, with restaurants planned for Washington, DC, VA, and UT. Wingstop Inc. operates and franchises 807 restaurants globally... Taziki’s Mediterranean CafĂ© opened its 52th location last month. Taziki’s has stores in 15 states...La-Z-Boy opened a new urban, small footprint store in Washington DC. The 3,000 s/f showroom is less than 1/4 the size of typical stores... The former owners of Oak NYC stores have reached an agreement to buy back their two stores in LA and two in the NYC from American Apparel...Target is planning stores of 45,000 s/f or less - 2 in Philadelphia, 3 in New York City and 2 in Chicago. Target opened 15 stores in 2015, 7 of which were traditional stores and 8 were smaller format...Middle Eastern restaurant chain Naf Naf Grill plans 10 new stores in 2016, and will build 150 stores in the next 5 years....Carl Icahn’s Icahn Enterprises will buy Pep Boys for $18.50 per share. The all-cash deal is valued at approximately $1.03 billion. Bridgestone Retail Operations, which also bid for Pep Boys, said it would not present a counter-offer. The company topped Icahn’s two previous bids, but declined to enter the third round. Icahn plans to combine the company, which has more than 800 locations, with the Auto Plus chain, which he acquired earlier this year... Sonic Drive-In signed franchise agreements to open 33 new drive-ins in multiple markets across CA over the next 7 years...Circle K Stores Inc., a division of Alimentation Couche-Tard, has purchased 62 convenience stores in 9 states from  Greatstone Equities Inc. Couche-Tard operates 8,000 convenience stores in North America...Steve Shannon Tire Co. Inc. is opening its 17th store in Sugarloaf, PA...Shinola brought its retail store count to 12 with the opening of locations in Miami, FL and Portland, OR...Philly Pretzel Factory is adding up to 40 stores in the Washington DC area, and plans to have 500 locations nationwide by 2020. The company currently has locations in 13 states... Dollar Tree will open 13 new stores throughout Pennsylvania...WineStyles Tasting Station has 21 locations, and plans to add at least 10 new stores, expanding its brand nationally in 2016....Sportsman’s Warehouse will open 3 new stores in the summer of 2016... Arby’s has signed a development agreement with its largest franchisee, United States Beef Corporation, to open 70 restaurants over the next 7 years. US Beef runs 331 Arby’s franchises. Arby’s has 3,300 total restaurants.


A&P has requested the bankruptcy court for permission to reject 52 leases including 36 for closed stores it has been unable to sell. If approved, the rejections would send the former A&P, Pathmark and Superfresh stores back to their landlords, who would be free to pursue new leases or uses for the spaces. A&P, which is approaching the final stages of its Chapter 11 wind-down, is selling the stores to raise funds to pay back creditors...Macy’s plans to close 35-40 department stores in early 2016 while moving ahead with expansion of its off price format. Since 2010, Macy’s has closed 52 Macy stores and opened 12 new stores. The closing will include 2 MA mall locations, in Springfield and Lanesboro...The 110,000 s/f four- level Times Square Toys “R” Us megastore shut its doors forever last month. Toys “R” Us Times Square opened in 2001, complete with a 60-ft. Ferris wheel. The retailer, which opted not to renew its Times Square lease, is looking for another Manhattan location... Barnes and Noble will close 10 stores in 2016. The chain currently operates more than 647 US stores...Fast-casual chain Cosi Inc. will shutter stores. The company closed a location in NYC and will close 3 additional locations in other markets. Cosi is “actively pursuing an exit strategy” for 6 other locations. The company has 79-company-owned and 30 franchised stores...Finish Line Inc. will close up to 150 of its 600 stores over the next few years as the company retrenches after posting a deep quarterly loss... Apparel retailer Joyce Leslie filed for Chapter 11 bankruptcy protection in New York, and is a likely candidate for liquidation. The chain, founded in 1945, operates 47 Northeast stores... JCPenney is closing 7 of its 1,020 stores as part of its annual review. The stores are mostly in smaller markets. Last year, Penney closed 41 stores and in 2014 it closed 33 stores...Sears Holdings Corp will close a number of US stores as part of an annual review and ongoing efforts to cut costs. The number was not disclosed; the closings will be primarily Kmart stores...Walmart will close 269 stores worldwide in 2016: 154 US locations including 102 Walmart Express stores, plus some supercenters, discount centers, and Sam’s Clubs. Walmart plans remain intact to open 50-60 supercenters, 85-95 Neighborhood Markets and 10 Sam’s Clubs during fiscal 2017.


Checkers is planning a return to CT next year with locations along the I-95 corridor in Bridgeport and New Haven. Future expansion plans are targeting other locations in New England including Providence and Boston. The chain has about 800 Checkers and Rally’s restaurants across the country...Modell’s Sporting Goods will snag its first downtown Boston store when it opens at the Boylston Street site of former rival City Sports in March. The move is a result of the bankruptcy proceedings of City Sports, which first filed for Chapter 11 bankruptcy in October...Construction has started on a 136-room, $14 million Hilton Garden Inn at Patriot Place in Foxboro, MA... Summer Shack closed its Dedham location last month. There are still 3 operating locations: Cambridge, Boston, and in Mohegan Sun... Big Y will acquire the operating assets of 3 MA O’Connell Convenience Plus Stations, which it will convert to its Big Y Express banner. There are currently two Big Y Express Gas and Convenience Stores in operation in MA...Luxury candy shop Sugarfina has opened a store at the Prudential Center. Sugarfina started as an online shop in 2012 and now has standalone stores and retail partners across the country. This is the company’s first standalone store in MA...MyStryde, New England’s first treadmill running studio, opened this month in Boston’s North End. MyStryde’s classes run along themes like Powerwalk, Stryde, Endurance and Bootcamp. In addition, they offer Race Training Packages for those training for the Boston Marathon and other major events. The studio features showers and bathrooms and a small retail space selling running accessories...Nordstrom will open a Nordstrom Rack at The Marketplace at Braintree, MA, scheduled to open in fall 2016, the sixth Nordstrom Rack in greater Boston. Nordstrom also operates four full-line MA stores... Webster Bank assumed the leases for 3 former Boston Citibank branches, giving the CT-based institution control of all 17 locations Citi abandoned in the region. Webster announced the Boston expansion in December, after Citi decided to pull out of retail banking in MA... The Boston Market in Saugus has closed. Boston Market currently operates 9 MA stores. The chain started in Newtonville in 1985 under the name “Boston Chicken”...The well-known Spag’s building on Route 9 in Shrewsbury has been demolished. The store, founded by Anthony “Spag” Borgatti, operated until 2013, selling household goods at low prices. The site will be converted to a 375,000 s/f mixed housing/retail space, which will include a Whole Foods.


Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 


Retail sales dipped last month on low gasoline prices and a slowdown in auto sale. Sales fell 0.1%, the Commerce Department said, in line with economists’ estimates. Excluding autos and gasoline, sales were unchanged.

Source: U.S. Department of Commerce -


Treasury Yield Sources:;


The Conference Board Consumer Confidence Index®, which had decreased moderately in November, improved in December. The Index now stands at 96.5 (1985=100), up from 92.6 in November. The Present Situation Index increased from 110.9 last month to 115.3 in December, while the Expectations Index improved to 83.9 from 80.4 in November.

Source: The Conference Board -


Manufacturing contracted in December as the PMI® registered 48.2%, a decrease of 0.4 percentage point from the November reading of 48.6%, indicating contraction in manufacturing for the second consecutive month, and is the lowest reading since June 2009 when the PMI® registered 45.8%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business -