Four Years After Bankruptcy, Most of Art Van Furniture's 85 Former Michigan Stores Have New Tenants - But A Familiar Use
4 years ago this week Art Van Furniture - once the largest privately held furniture company in Michigan - filed for bankruptcy.
All 85 of its corporate-owned Michigan stores ultimately closed for good.
And over 3.5 million square feet of commercial real estate was vacated.
But now ~90% of the former Art Van stores in Michigan have been re-occupied.
And the new tenants and uses are not surprising:
70% of the re-tenanted Art Van stores still operate as furniture and mattress stores.
Only now they are home to the likes of Gardner White Furniture, Value City Furniture, ABC Warehouse, Sleep Number, Mattress Firm, US Mattress and others.
Art Van Elslander founded the eponymous Detroit-based Art Van furniture chain in 1959.
He grew the family-owned chain steadily over the years.
By 2016 there were nearly 100 Art Van Furniture stores – 85 in Michigan with the rest in neighboring states.
In 2017, 86 year old Art sold the chain to Thomas H. Lee (THL) Partners, a Boston-based private equity firm.
THL Partners then merged Art Van with two other mid-Atlantic furniture chains that it acquired later that year to create the 10th largest U.S. furniture chain.
Unfortunately, the post-merger Art Van Furniture was plagued by weak customer traffic, competition, integration issues and higher operating costs, a combination of factors that ultimately culminated in the company’s March 2020 bankruptcy filing.
A white knight emerged two months into the Art Van bankruptcy when a Dallas investment firm acquired the leases and inventory of 17 Art Van stores in Michigan and re-opened them as Love’s Furniture.
Unfortunately, the Love’s Furniture experiment was short lived; by January 2021 Love's Furniture had also filed for bankruptcy, closed its stores, and liquidated its remaining inventory.
The Art Van bankruptcy and subsequent failure of Love’s Furniture resulted in the permanent closing of all 85 Art Van Michigan stores which included:
35 freestanding Big Box showrooms that averaged 65,000 square feet each;
50 PureSleep Mattress stores that averaged 5,000 square feet each and that were primarily located in regional shopping centers and strip malls; and
Art Van's ~1 million square foot corporate headquarters and distribution center in the Detroit suburb of Warren.
But most of the Art Van real estate was quickly filled.
Just 3 years after the final January 2021 store closures in the Art Van and Love’s Furniture bankruptcies, more than 80% of the Big Box furniture showrooms and over 90% of the PureSleep strip mall mattress sites in Michigan have been backfilled with new tenants.
And the majority of former Art Van stores share a common use:
~70% of re-tenanted sites still operate as furniture and mattress stores.
It makes sense as the $700 MM in annual sales generated at Art Van’s Michigan stores was up for grabs after the closures.
And many Art Van sites had been "known" furniture destinations for decades.
Plus the stores were already built out for a furniture and mattress retail use, so few improvements were necessary for new retailers to be up and running at the sites.
So for Art Van's competitors it was a unique opportunity to quickly and profitably grow their business by absorbing the lost sales.
Value City Furniture took 10 former Art Van Big Box showrooms and Art Van’s Michigan rival Gardner White Furniture backfilled 7 sites.
Large Art Van showrooms were also leased to Ashley HomeStore and ABC Warehouse.
Additionally, roughly 70% of the former ArtVan PureSleep strip mall mattress stores were leased to other mattress retailers, including both large national companies such as Mattress Firm and Sleep Number as well as independent and franchised operators like US Mattress which now operates in over a dozen former PureSleep stores.
Even most of Art Van's one million square foot corporate headquarters and distribution center in Warren, Michigan has been leased.
Not surprisingly, a large portion of the former Art Van Furniture headquarters property and distribution center was backfilled by Gardner White.
Gardner White relocated its corporate headquarters to the former Art Van site and also opened a flagship retail store on the premises.
Finally, even six independently owned Michigan furniture stores that had operated as Art Van franchisees prior to its bankruptcy also quickly found a new partner.
These independent operators - many of whom had operated furniture stores for decades in the mid-Michigan cities of Mt. Pleasant, Cadillac, Traverse City, and Gaylord - joined with Ohio-based Big Sandy Superstore and re-branded their stores.
Over 3 million square feet of Art Van's Michigan real estate has been re-occupied since the store closures in 2021.
It may surprise that most of Art Van’s Michigan furniture stores were so quickly re-tenanted after its bankruptcy.
But it actually demonstrates the results from a tried and true strategy of commercial real estate owners and brokers when they lose a tenant:
They make their first calls to (and often quick deals with) its competitors!