Leases Of Bankrupt Retailers Fueled 2024 New Store Growth For Dollar Tree, Burlington and Ollie's Bargain Outlet

Hundreds of new Dollar Tree, Burlington Stores and Ollie's Bargain Outlet stores were the product of lease acquisitions from retailer bankruptcies

Over 250 new 2024 (and future 2025) retail store openings did not result from new leases entered into between tenants and landlords.

But rather were the result of existing leases that were acquired by users from retailer bankruptcies.

In fact, 250 new stores resulted from the bankruptcies of just 3 retailers:

99 Cents Only Stores, Conn’s and Big Lots.

Collectively these retailers closed over 1,400 stores in 2024 after filing for bankruptcy.

And just three retailers — Dollar Tree, Burlington and Ollie’s Bargain Outlet — accounted for the majority of these leasehold purchases.

• Dollar Tree acquired the designation rights for leases to 170 99 Cents Only stores that were closed after the dollar store retailer’s Spring 2024 bankruptcy. The former 99 Cents Only leases accounted for roughly 1/4 of Dollar Tree’s 2024 new store openings.

• Burlington Stores is planning to open 100 new stores in 2025 — many of which will come from the 38 leases that Burlington acquired in the second half of 2024 from the bankruptcy estates of 99 Cents Only, Big Lots and Conn’s. Burlington was even more active with lease purchases in 2023 — as the 64 Bed Bath & Beyond leases that Burlington acquired following Bed Bath’s April 2023 bankruptcy filing accounted for ~40% of of its net new store openings in 2023 and 2024;

• Ollie's Bargain Outlet acquired 8 leased sites in Texas that were vacated by 99 Cents Only stores — and opened new stores at the sites within months. The former 99 Cents Only leases accounted for close to ~20% of new Ollie’s stores in 2024. Later in the year Ollie’s acquired 24 leases from the Big Lots bankruptcy — and a head start towards meeting its new store plans for 2025.

Other retailers that acquired leases in 2024 from bankruptcy auctions include ALDI, Dick’s Sporting Goods, Grocery Outlet, Harbor Freight, American Signature Furniture and Ocean State Job Lot.

For companies seeking to add new stores, these lease acquisitions were a boon.

Most leases were at (or below) market rent, in attractive sizes and locations and some were the only space availabilities in hard-to-enter or supply constrained submarkets.

The acquisition of leases was not an inexpensive exercise, however.

Retailers spent both to acquire the leases in the bankruptcy auctions and pay "dark rent” while they renovated the spaces for their use.

For instance, Dollar Tree paid approximately $13 million for the rights to acquire the 170 leases of the 99 Cents Only stores.

It then paid “cure costs” to Landlords — or amounts that had been owed by the tenants when they filed bankruptcy — and became immediately responsible for rent, insurance and other charges pursuant to the leases even prior to opening stores at the sites.

Additionally, Dollar Tree had to fund the buildout and renovation of these spaces without any contributions from Landlords.

Ollie’s acquired the eight 99 Cents Only leases (as well as the real estate for three additional stores) by paying ~$15 MM to the bankruptcy estate.

Like Dollar Tree, Ollie’s immediately began paying rent on the leases and funded all renovation costs for the stores, most of which opened within three months.

Lease acquisitions provided Dollar Tree, Burlington, Ollie’s and others with a critical pathway to bolster their new store pipeline in an otherwise tight market for Big Box retail space.

So will a similar opportunity present in 2025?

Recent news reports suggest that Big Lots will be unable to emerge from its current Chapter 11 bankruptcy. That means its remaining ~900 store leases could go up for auction in the first quarter of 2025.

Potential bankruptcy filings by Party City and The Container Store may also be on tap for early 2025 and could provide acquisition opportunities for an additional ~800 store leases held by the two retailers.

So fast growing retailers in search of pre-negotiated leases and ready-to-occupy Big Box space will likely be ready to pounce if — and or when — these opportunities present..