Dominick's may bring other retailers to some stores
(Crain’s) — Dominick’s is looking to carve off a small piece of some its biggest locations and sublease the space to other retailers.
The Oak Brook-based grocer, a unit of Pleasanton, Calif.-based Safeway Inc., hopes to make the changes at 15 of its stores and has hired Westmont-based John Pope & Associates Inc. to handle the assignment, according to sources familiar with the matter.
The move could be a way to improve underperforming stores by giving Dominick’s a space closer to its current 55,000- to 60,000-square-foot format. All 15 stores are larger than that format.
Also, the plan could bolster revenue by allowing the grocer to lease the spaces at specialty-store rates — often in the $20-30 per square foot range — while paying rent that could be in the high single digits.
“With the economy what it is, this could become a way retailers look to try and recoup some income,” says Allen Joffe, a principal and managing broker with Chicago-based Baum Realty Group. “Dominick's does have some oversized locations.”
Depending on the size of the spaces made available, Mr. Joffe says potential users could include clothing stores or small fitness centers. Of course, the tough retail climate will make it difficult for Dominick’s to land tenants at top rents.
So far, three of the sites have been identified: 2503 Waukegan Road in Bannockburn, 2575 W. Golf Road in Hoffman Estates and 3145 S. Ashland Ave. on Chicago’s Southwest Side just off Interstate 55.
John Pope & Associates owner John Pope declined to comment, and a Dominick’s spokeswoman didn’t return a call seeking comment.
The store in north suburban Bannockburn has 5,740 square feet available. The stores in northwest suburban Hoffman Estates and Chicago both have 5,120 to 7,680 square feet available.
Sources say Dominick’s considered a similar strategy with some of it stores more than five years ago, but never pulled the trigger because of concerns that returns wouldn’t be high enough to justify the construction costs and that the space wouldn’t get rented.
