BOULDER and LONGMONT — It isn’t just the employees and customers of Lucky’s Market who are left in the lurch when the grocery store locations close, as is the case at dozens of Lucky’s stores around the country. Businesses that share shopping center space also suffer when anchor tenants go belly up.
“As one could imagine, [the Lucky’s closure] will likely have a pretty negative impact in the short term for the other tenants in the shopping center while the landlord regroups and finds a replacement anchor,” Geoffrey Keys, president Keys Commercial Real Estate in Boulder, told BizWest.
Lucky’s, which filed for Chapter 11 bankruptcy protection last month, has closed its Longmont location in the Parkway Promenade shopping center and its south Boulder location at Table Mesa. The Colorado locations in Fort Collins and north Boulder remain open.
“While there is still some good retail action [in south Boulder’s Table Mesa shopping center], I think those tenants are definitely going to feel the loss of Lucky’s in terms of traffic and sales,” Keys said. While the absence of a major tenant is a concern, nearby businesses may not be without an anchor for long.
“A lot of these anchor stores don’t stay vacant very long in Boulder,” Keys said.
“The area around Table Mesa is a little bit underserved since Whole Foods left” the Basemar shopping center in 2017, he said. “I think there is definitely room for another organic, natural food-focused grocery in Table Mesa. I can’t envision that space staying empty for long.”
If another grocery doesn’t move in, “there are a bunch of uses that could have success out there,” Keys said.
He pointed to outdoor apparel retailers, liquor stores and restaurants as particularly well-suited for that space.
Re/Max Tradition’s Inc. broker Keith Kanemoto offered a similar take on the Longmont Lucky’s.
“The former Lucky’s store in Longmont has a lot of different possibilities and potential,” he said. “The space could be divisible to accommodate a variety of different retailers.”
Recent history suggests the Lucky’s retail space in Boulder could have a new occupant before the location in Longmont, where big box stores and shopping areas are more prevalent.
Directly adjacent to Lucky’s Longmont location is a vacant Big Lots, which has sat without a tenant since Big Lots moved to a new space on Main Street more than a year ago. The relocated Big Lots moved into another long-vacant space that formerly housed K-Mart.
Still, Longmont’s big box spaces have mostly filled in the past year or two. At Home Decor Superstore took over the former JC Penney space, 955 S. Hover Road, last year and the shuttered Office Depot on Ken Pratt Boulevard was replaced with The Wild Game Experience the prior year. New tenants, including a Burlington (NYSE: BURL) department and clothing store, are expected to soon occupy the former Sports Authority retail space at 1250 S. Hover Road in Longmont’s Village at the Peaks shopping center.
The Longmont Lucky’s Market could prove particularly appealing for new tenants due in no small part to its highly visible location near the intersection of Main Street and Ken Pratt Boulevard, Kanemoto said.
“While there are short term impacts to the neighboring businesses, you still have strong fundamentals in that shopping center,” he said. The store is “near one of the busiest intersections in Longmont” and features a “usable design” that could “offer a lot of different possibilities” for various types of retail users.
“You never know, the space could be backfilled by [a grocery store brand] like Trader Joe’s that doesn’t have a presence in Longmont,” Kanemoto said.
Other supermarket chains are lining up to take over Lucky’s leases at other closed stores. Lucky’s founders Bo and Trish Sharon are bidding to buy the stores in Fort Collins and north Boulder.
“It seems as if a number of stores will get repurposed to another brand. Hopefully, it will be short term,” Neil Stern, a retail industry analyst and senior partner at Chicago-based consulting firm McMillanDoolittle LLP, said of negative impacts on shopping centers like those in Longmont and south Boulder.
While Keys said he doesn’t expect the ongoing Lucky’s saga to scare landlords away from leasing to upstart natural foods grocers, the situation does underscore the importance of due diligence on the part of property owners.
“You have to look at each [tenant] on a case by case basis to see how the retailer is capitalized and make a value decision about how they would fit into the community and the shopping center location,” he said.
Featured in BizWest – February 13, 2020