Proposals, Plans Spring Up For Fry's Sites on West Coast
A West Coast retail chain, Fry's Electronics, appears to be upping the ante on its efforts to turn its relatively large store sites into cash via redevelopment.
Fry's, a private company founded in 1985 that was a regional competitor to Radio Shack, has been quietly selling off its quirky-themed properties in an ever-changing retail landscape, which relies less and less on brick-and-mortar locations.
The latest potential deal to come to light centers on Fry's store in Renton, Washington, a suburb on the southeast edge of Seattle.
On Tuesday, the Puget Sound Business Journal reported that it had obtained emails dating to May between an architect in the Seattle office of Carrier Johnson + Culture and a Renton city planner saying that the firm had been chosen by Campbell, California-based Bay West Development to design a 1,000-unit multifamily development on an 11.5-acre property at 800 Garden Ave. N, which is occupied by a 152,000-square-foot Fry's store built in 2002.
Neither the parties involved nor the city of Renton immediately responded to a request for comment from CoStar.
Like many big box retailers, Fry's has been working to adapt to shifts in consumer behavior that have brought far less foot traffic into brick-and-mortar stores in recent years. News reports in the past couple of years have noted empty shelves and no cash register lines at many of the company's stores, raising questions about its real estate plans.
A spokesman told the Mercury News last year that the company did not plan on liquidating or closing stores but instead was switching most of its suppliers to a consignment model, which would allow it to only pay suppliers when products sold. The move can be a way to reduce upfront expenses.
Over the past year, a number of Fry's stores have closed and a variety of development schemes have sprung up around the chain's properties, which tend to be large sites in high-demand locations.
The move stands against the backdrop of a larger trend happening among retailers, an unprecedented number of which have filed for bankruptcy protection and announced or executed plans to close thousands of stores permanently, with plummeting in-person sales during the pandemic this year.
"This is the rightsizing of retail," said Ryan Patap, CoStar's director of market analytics in Los Angeles. "Selling [real estate] definitely makes sense as a strategy to shore up finances."
Development Plans
Fry's, based in San Jose, California, had 25 operational stores around the United States as of March, spread among California, Texas, Arizona, Georgia, Illinois, Indiana, Nevada and Washington, according to its website.
The stores come with quirky themes, such as sci-fi B-movies and Aztec temples, and acres and acres of parking lot, ripe for redevelopment. Its Burbank, California, location, for instance, sits on 10 acres, but the store spans roughly 100,000 square feet, according to CoStar.
Fry's Renton location is not the first to catch Bay West's attention. In April, Bay West submitted a preliminary development plan to the city of San Jose that called for building up to seven office buildings at Fry's flagship store, headquarters office and warehouse at 550 E. Brokaw Road. The office campus would include 3.8 million square feet of new office and parking space, with capacity for 10,000 employees.
Industrial property giant Prologis also inquired into the possibility of changing the site's zoning to combined industrial and commercial.
In fall, Houston-based multifamily developer Kaplan Management Company put forward plans for an 880-unit housing development and hotel at 6100 Canoga Ave., Fry's site in Woodland Hills, California, that it purchased in February for $48 million.
In September 2019, Prologis paid Fry's $40 million for a 12-acre property in Anaheim at 3370 E. La Palma Ave. in a sale-leaseback deal for about $278 a foot, or about 25% more than the market sale price for similar properties in the area at the time.
Prologis is already advertising industrial space for lease at that property, according to CoStar.
The redevelopment plans could make better use of the properties, which may otherwise be hard to backfill if Fry's were to close its doors.
"Big box stores have a limited pool of tenants who could use them," Patap said.