Toys R Us will close 18 stores in the Houston area, putting 673,000 square feet of retail space on the market.
It’s a lot of space to hit the market at once — the equivalent of a small mall or several department stores. The retail space vacated by Toys R Us would be slightly bigger than the megachurch campus of Lakewood Church.
“It’s significant,” Ed Wulfe, president and CEO of Wulfe and Co., said. “Fortunately, it’s distributed across the whole city in proven retail locations.”
Toys R Us is not the first major retailer close this much space in Houston, Wulfe said. The longtime retail broker and developer pointed to examples such as Venture Stores, Phar-Mor and Circuit City.
“This is not a new thing,” Wulfe said.
When a major retailer closes this many stores, it provides opportunities for new businesses to expand or enter the Houston market. When Sports Authority closed, it opened the door for Dick’s Sporting Goods to take its place. Total Wine & More took a number of Rice Epicurean Market locations, Wulfe said.
Toys R Us closings in Texas
Toys R Us will close 20 stores in the Houston area, Beaumont and College Station, putting 746,000 square feet of retail space on the market. While that is a lot of space to hit the market at once, it’s not unprecedented, said Ed Wulfe, president and CEO of Houston-based retail brokerage Wulfe & Co. He expects 75 percent of the vacant Toys R Us space to be filled in a year. Map by John D. Harden/Houston Chronicle
Wulfe said he is confident 75 percent of the retail space vacated by Toys R Us will be leased in a year. Many of the Toys R Us stores closing in Houston are in good locations: mature neighborhoods with a built-in population base attractive to retailers.
Possible tenants include local retailers looking to expand their Houston footprint, out-of-town competitors looking to enter the market, and new concepts, like climbing gyms and bumper cars, that have leased former retail spaces.
“It is meaningful, but it is a manageable amount of space,” Wulfe said. “I think the market can absorb this within a year.”
Toys R Us plans to close 735 Toys R Us and Babies R Us stores nationwide — including 65 locations in Texas — over the next 60 days. The closure would affect as many as 33,000 employees.
The 18 Toys R Us and Babies R Us stores slated for closure in the Houston area range in size from a 3,200-square-foot express store in Texas City to a 65,522-square-foot side-by-side store in Katy. A little more than half of the locations are leased; the remainder are owned by the retailer.
Toys R Us also plans to close one store each in Beaumont and College Station.
For more than a decade, Toys R Us has been struggling to pay down billions of dollars in debt as it competes against e-commerce competitors. The New Jersey-based toy retailer filed for bankruptcy in late 2017.
After a disappointing holiday sales season, the company announced in January it would close 182 stores, and then this week announced it would close all 800 stores nationally.
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