99 Cents Closures to Open Retail Opportunities in SoCal

The pending closure of 99 Cents Only Stores will leave a 3.8 million-square-foot hole in Southern California. The good news for landlords: the gap may be easy to fill.

The Commerce-based discount chain, which filed for bankruptcy early this month and announced it would close all 371 stores, leaves a legacy of opportunities for future tenants, Bisnow reported, citing local real estate brokers.

“Over the past five years, there’s just been a lack of overall quality box inventory in L.A. proper or infill Los Angeles,” CBRE Senior Vice President Jamie Brooks said. “99 [Cents Only], for all its challenges, controls some magnificent real estate.”

99 Cents Only blamed financial trouble related to the pandemic, inflation and theft in announcing its liquidation and closure of its stores, including 164 across Southern California, according to Beta Agency. Other stores in Texas, Nevada and Arizona will also be closed.

Early reports indicated that 143 stores would close, and that an executive for Pic ‘N’ Save Bargains was recruiting investors hoping to buy and reopen the local 99 Cents outlets. It’s not clear if Mark Miller, CEO of Culver City-based Pic ‘N’ Save Bargains, has made headway on the deal.

99 Cents Only Stores was founded in 1982 by Dave Gold, who opened its first store in L.A.’s Ladera Heights, according to his 2013 obituary in the Los Angeles Times. Gold, who’d been working at a liquor store owned by his father, found that marking down surplus goods to 99 cents caused them to sell out “in no time.”

99 Cents Only stores average 23,000 square feet, according to CoStar, putting them in a “junior box” retail category.

Vacancies are low for retail stores across the U.S. and the Southland, but are acutely low for stores of this size, Beta Agency partner Richard Rizika told Bisnow.

“Historically those leases were very competitively negotiated,” Rizika said. “There is an opportunity for a lot of the landlords to go ahead and increase rents if and when those leases were rejected by the bankruptcy court.”

99 Cents Only Stores, now in bankruptcy, said it plans to have all its stores close by the end of May, a timeframe that many CRE professionals said seemed accelerated.

The market may be ready to replace them. All the brokers that Bisnow spoke to said they expect the shuttered stores to be released soon.

Vacancy of retail stores across greater Los Angeles in the first three months of this year was 5.2 percent, according to JLL. The retail vacancy in Orange County was 4 percent, according to Kidder Mathews.

Though 99 Cents Only leases the vast majority of its stores, it owns 28 in California, including its store on Sunset Boulevard in Silverlake and another on Pico Boulevard in West L..A, CoStar reported.

Barbara Armendariz, founder of SharpLine Commercial Partners, said that after 99 Cents Only Stores announced the bankruptcy, she had at least 40 calls from investors interested in possibly buying the stores.

She also knows of at least a dozen retailers that are combing through the chain’s portfolio for opportunities.

“They’re going to get snatched up very quickly, or as easily as the bankruptcy court allows,” Armendariz, who worked with 99 Cents Only in Los Angeles and Orange counties and the Inland Empire for more than a decade, told Bisnow.

— Dana Bartholomew