OVERVIEW
After a year of developing the optimal strategy for the trade area including negotiations of a lease renewal and a new lease alternative for Bed Bath & Beyond’s flagship location at the Village on the Parkway, Steve Lieberman and Peter Russell, Director of Real Estate for Bed Bath & Beyond, Inc. structured a new twist: a purchase contract—the company’s first acquisition in Texas.
Lieberman and Russell have structured 92 leases, totaling 2.7 million SF, across the southwest for Bed Bath & Beyond, Inc. In the largest purchase by a retailer in 2009, The Retail Connection represented Bed Bath & Beyond, Inc. in the acquisition of the former 128,000 SF Home Depot Expo at the Dallas Galleria. The building became the new home for Bed Bath & Beyond’s prominent 54,337 SF Beltline/Tollway flagship superstore.
In addition, Bed Bath added their newest concept, buybuyBABY [33,607 SF] in its largest Texas format as well. Both stores opened in January 2010. Bed Bath & Beyond operates 23 full line stores in DFW and this was their second buybuyBABY in the area.
OPPORTUNITIES | CHALLENGES
Bed Bath & Beyond had operated its Village on the Parkway store for 15 years. The iconic site was the company’s first store in DFW, and flagship for the state of Texas. Despite a multi-level layout and constrained parking, the store was one of the chains top performers, making any moves relating to the store significant.
The Home Depot Expo property was premier real estate. The size of the box, economics associated with the transaction, and the macroeconomic environment created multiple challenges. However, the site provided Bed Bath & Beyond several opportunities that they could not pass up, including the ability to deliver its customers a ground-level, ground-zero shopping experience with incredible accessibility and parking.
“Steve and I have structured some great deals together, however, only one can be the best and Bed Bath’s expectation is that this [is] it”, said Russell.
The acquisition simultaneously provided the company an invaluable investment opportunity and control of its destiny for one of its most important trade areas. Then the balance of the property was maximized including optimal use for the remaining 40,000 square feet inline and potential building of a multi-tenant outparcel at the front.
RESULTS
The location and scale of the site position it as one of the premier commercial properties in DFW. Its development potential made it the most sought after piece of real estate to come available in recent years.
Home Depot received over a dozen contracts within weeks of signaling the property’s availability. The Bed Bath & Beyond team leveraged every advantage they had including their ability to carry the investment to its current highest and best use—a retail superstore. Another advantage was the company’s flexible footprints which gave them the ability to optimize the full building depth.
Their unique capacity to make a firm commitment to the seller and close the transaction unconditionally further enabled the company to distinguish themselves from the “who’s who” list of investors intent on purchasing the property.
The project, which was the largest adaptive re-use of retail space in 2009, impacted the DFW real estate market and economy in many positive ways. By transforming a highly visible vacant building into a productive operating enterprise, the transaction significantly reinforced the strength of the Galleria trade area. The remaining prized 40,000 SF of inline space then became the only ground floor space available in the trade area of its size.
Additionally, the proposed multi-tenant outparcel building was the only such space available peripheral to the Galleria Mall with frontage to the Tollway. The transaction was the result of unparalleled knowledge providing Bed Bath & Beyond the foundation to move at the speed and force necessary to win the deal.