Ollie's Bargain Outlet has snapped up roughly three dozen Big Lots' store leases as part of a Chapter 11 proceeding, a move it says will help it speed up its expansion.
Harrisburg, Pennsylvania-based Ollie's said that it was picking up the rights to a new batch of Big Lots leases, 40 of them, from Gordon Brothers Retail Partners, subject to final bankruptcy court approval. Including the additional locations, Olllie's said it has acquired a total of 63 former Big Lots store leases to date.
That isn't the only activity relating to Columbus, Ohio-based Big Lots portfolio. OhioHealth is buying the retailer's headquarters at 4900 E. Dublin Granville Road for $36 million, according to court documents. OhioHealth — a hospital chain also based in Columbus — is a network of 15 hospitals, three joint-venture hospitals, one managed-affiliate hospital, more than 200 ambulatory sites and other health services spanning a 50-county area.
Hundreds of store leases have been auctioned this year and last year as troubled retailers downsize their fleets or file for Chapter 11 and liquidate, closing all their locations. That roster includes Party City, which is in the process of shutting all its stores now.
Leases are finding some takers as vacant retail space is limited, with a 4.2% vacancy rate, according to CoStar data. Retailers such as Ollie's, and others, need space to grow. Last year, discount retailer Dollar Tree acquired rights to leases for 170 stores of 99 Cents Only, which went out of business.
Ollie's latest purchase of former Big Lots leases lines up with its business and growth strategy, according to Eric van der Valk, the chain's president and CEO.
"These locations are the right size, come with favorable lease terms, are located in existing and adjacent trade areas, and have long serviced value-conscious consumers,” he said in a statement. "Similar to what we have done with previous store acquisitions over the past year, we will adjust our existing new store openings and prioritize the opening of the acquired stores in a manner that makes the most operational and financial sense."
The former Big Lots locations will allow Ollie's to accelerate its store openings in 2025 above its 10% annual growth target and open about 75 locations, according to van der Valk.
Big Lots' real estate went up for grabs after the chain — which bought of home goods merchandise through closeouts, liquidations and overstocks to sell at low prices — filed for bankruptcy in September. Gordon Brothers, headquartered in Boston, ended up buying the company in December as part of the Chapter 11 process. At that time, Gordon Brothers said it had struck a deal for Henderson, North Carolina-based Variety Wholesalers to acquire the Big Lots brand and associated leases for 200 to 400 stores and keep them open under the Big Lots banner. That deal saved Big Lots from liquidation.
Variety — whose chains include Roses, Roses Express, Maxway, Bill's Dollar Stores, Super 10, Super Dollar, and Bargain Town — just filed with the bankruptcy court to take an additional 22 Big Lots' locations, so far bringing the total they want to 220, Al Williams, co-head of North America real estate services at Gordon Brothers, said in an email to CoStar News on Friday.
In February, Gordon Brothers put roughly 500 Big Lots leases on the market. More announcements about retailers acquiring Big Lots' leases will be coming soon, according to Williams.
Going-out-of-business sales are continuing through mid-March at 342 Big Lots stores, he said.
Big Lots' headquarters, built in 2018, is 329,348 square feet and sits on 24 acres, according to CoStar data. Its new owner, OhioHealth, hasn't exactly decided what it plans to do with the property.
“OhioHealth has a significant presence in New Albany, particularly in the Hamilton Road corridor, which includes a major ambulatory facility, an urgent care and a freestanding emergency department," a spokesman for the healthcare chain said in an email to CoStar News. "As part of our continued interest in growing services in the communities we serve, OhioHealth purchased the existing Big Lots’ Headquarters to potentially convert to healthcare use. Different concepts are currently being considered and no specific project is planned or funded at this time.”