Starbucks and the Regional Mall Operators
As most of you know by now, the coffee and espresso giant Starbucks is closing 600 stores nationwide. After parsing through the articles and taking a look at the complete list of Starbuck stores that are closing. I started to notice a trend. Regional mall operators are taking it on the chin.
In my local metro market General Growth Properties owns what was once a quaint and productive little regional mall called West Oaks. Prior to Starbucks showing up in force, the coffee shop in the mall was operated by Barnies Coffee and Tea. However, a couple of years ago Starbucks snatched up a large portion of the Barnies and re-branded them as Starbucks.
The impact of the Starbucks closure in the regional malls hurts not only the REITs that own these properties, but also the other stores which feed off the foot traffic created by coffee shops. I suspect other coffee companies may pick up where Starbucks dropped off; Barnies may re-emerge in Florida for example. Likewise we could see Caribou Coffee use the Starbucks departure as an opportunity to expand in new markets.
Regardless I believe that regional mall REITs may have a rough couple of years ahead with the advancement of mixed-use and neighborhood retail.
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Jul.21.2008. 07:43
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