From the South Florida website: Sports Authority, which has about a dozen stores in Los Angeles, has set a June 29 date to auction off leases to 320 of its stores nationwide, including 48 in Florida.
Bidders have a June 23 deadline to present offers to A&G Realty Partners, a consulting firm in Melville, N.Y.
Up for auction in South Florida are leases for three stores in Miami, among 18 in the tri-county area, as the debt-strapped sporting goods retailer moves ahead with its bankruptcy plan.
The South Florida stores range in size from 10,981 square feet on Miami’s Coral Way to 48,583 square feet in Deerfield Beach. The base rent per square foot on the leases starts at $5.50 in Deerfield Beach and reaches $22.05 in Wellington in Palm Beach County, according to A&G’s prospectus. (See full list below for locations, square footage, rates and other information.)
Real estate specialists say demand has been slowing for big-box space nationwide, as retailers face growing competition from online sellers. Many large chains now seek smaller spaces for shops. Yet every site and lease must be considered on its own merits, they say.
“You have to look at each store, mall and the demographics around it,” Brian L. Belt, a real-estate attorney at Gunster law firm in Miami told The Real Deal. “South Florida is a hot retail market right now” because of a growing population, ample tourism and little new inventory for big-boxes built since the 2008 financial downturn.
What’s more, leases for auction tend to be purchased only if they’re deemed a bargain – available at a price below the current market rate or with an option for renewal lower than the market price expected in the future, specialists said. Bargain hunters may include other retailers or even the property owners themselves, who see a chance to buy back the existing lease and bring in another tenant at a higher rate in short order.
“Traditionally, not that many leases get sold in an auction market unless there’s true value to that lease,” said Andrew Carlson, vice president for retail brokerage at JLL who represents national and regional retailers expanding into Florida.
Some Sports Authority locales in South Florida clearly are appealing sites, property specialists say.
In Boca Raton, for example, there is no available big-box space in the 69 existing shopping centers, and the chain’s 43,176 square foot store at 20851 State Road 7 is located at a “very strong retail intersection with high demand” near a Petsmart and hhgregg, said Joshua Ladle, an associate with commercial real-estate services firm Avison Young.
“I expect the owner of the Sports Authority box to re-lease it fairly quickly to another national tenant,” Ladle told TRD. “While it is possible to break up the box and put two tenants into the box, that would be extremely costly, and based on demand for big boxes [in the submarket], unlikely to happen.”
But the question is: Will buyers find their existing leases enough of a bargain to offer an auction bid?. The lease for the Boca Raton store, for instance, has a base rent per square foot of $21.72 through Jan. 31, 2020, with its next rent option at $22.46, according to the A&G prospectus.
Sports Authority, based in Englewood, Colorado, filed for Chapter 11 bankruptcy in March, aiming to close some 140 underperforming stores and restructure. But when it couldn’t find a buyer, it announced plans in May to liquidate. The liquidation includes shutting 320 more stores not initially set to close and offering their leases for auction.