Starbucks on hit list at 'great' sites
9 Colo. locations to be snapped up, retail brokers say
By John Rebchook, Rocky Mountain News (Contact)
Friday, July 18, 2008
Do you find Starbucks addictive, or merely trendy and over-priced?
Melanie Conner / Getty Images
Pedestrians walk by the flagship Starbucks store at Pike Place in Seattle. Starbucks Corp. announced that it will close 600 company-operated stores, including nine in Colorado.
Starbucks should have no problem in re-leasing the nine stores it plans to close in Colorado, commercial Realtors said Friday.
"A store that is not acceptable for Starbucks, is great for just about every other business," said David Fried, a retail broker with Fuller and Co.
Nationwide, the Seattle- based company is closing 600 of its company-owned stores, including nine in Colorado.
In Colorado, it is closing about 5 percent of its 214 stores. By contrast, it is closing 59 of its 437 stores in Florida, or 13.5 percent, and is closing 57 of its 509 stores in Texas, or 11.2 percent.
California is losing the most stores, 88, or 4.9 percent.
"Starbucks will attempt to work with its landlords to negotiate termination agreements," the company said in a statement. "Unfortunately, we cannot provide further details at this time. Starbucks does not disclose the details of our lease agreements."
Another Starbucks spokesman said the fate of each store will be "decided on a case-by-case and a location-by-location basis."
The stores are to be closed between now and March.
Fried, who has never had a cup of coffee in his life, said it is a testament to the Denver area that so few stores are being closed.
"I'm pleased they're only closing nine stores. That speaks well to Colorado's support for a Starbucks-type of demographic," said Fried, who owns Starbucks stock.
"If you look at the stores they're going to re-lease, they are all at great locations," he said. "They just missed the demographic mark by a small fraction, or their proximity to other Starbucks caused them to cannibalize each other."
He said the typical store ranges from 1,800 to 2,200 square feet and they typically have 10-year leases, often with an option to terminate after five years.
Retail broker Phil Hicks, principal of David Hicks & Lampert Brokerage, said while most of the stores being closed are strong locations and will be attractive to other coffee shops or quick-service restaurants, he said some of them are not as good as the ones they chose in the past.
"I think it was a question of quantity over quality," Hicks said. "Wall Street wanted them to expand, so they did. I helped roll out their stores when they first came to Colorado (in the early 1990s), and some of the sites they are closing are ones we never would have even looked at."
Hicks said he wouldn't be surprised if Starbucks decided to close even more stores.
"This could just be the first wave," Hicks said. "That's how a lot of retailers do it. I'm just saying whether it is Starbucks or Linen 'n Things, we became overbuilt and retailers are giving back space."
Mary Beth Jenkins, principal of the Laramie Co., a real estate consulting and brokerage firm, said that the nine Starbucks that close in Colorado will be snapped up quickly.
"In a number of the cases, they just had two stores too close to each other, so they were diluting their own market," she said. "This is great real estate."
rebchookj@RockyMountainNews.com or 303-954-5207
Caffeine deficit
Starbucks released the locations of the 600 stores it will be closing. It includes nine in Colorado:
* 121st & Sheridan 12161 Sheridan Blvd., Broomfield
* Conifer Town Center 27191 Main St., Conifer
* 16th & Wynkoop 1750 16th St., Denver
* Colorado & Alameda 320 S. Colorado Blvd., Denver
* Denver Newspaper Agency Bldg. 101 W. Colfax Ave., Denver
* Colfax & Wadsworth 1509 Wadsworth Blvd., Lakewood
* Colo. 119 & Martin 15 Ken Pratt Blvd., Longmont
* The Shops at Centerra 5897 Sky Pond Drive, Loveland
* Colo. 34 & Denver 1385 N. Denver Ave., Loveland
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July 19, 2008
2:24 a.m.
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speedstan writes:
"their proximity to other Starbucks caused them to cannibalize each other" - Bingo. Too bad it took someone at corporate years to figure out that while having a store every 5-6 blocks might work for a 7-11, it wouldn't work for an outfit with a considerable lower gross per square foot. While I am prone to stop in at a local Starbucks now and then (for their highly addictive Frappucino drinks - their hot coffee is nothing special IMHO), I never could see how a store with a relatively limited customer base and product line could justify the density. I'm willing to bet that Starbucks could close a lot more than 9 stores in the metro Denver area without seriously impacting sales.
July 19, 2008
8:20 a.m.
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gary writes:
Gee..you don't think that people just might be getting smart enough not to pay for overpriced coffee?
Nay...they are not that smart...are they??
Nuff Said!
July 19, 2008
10:24 p.m.
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WarrenJimmyBuffett writes:
Phil Hicks tells it like it is. If I were a retail landlord or tenant, I would work with that guy. Mary Beth needs to lay off whatever she is taking. Great real estate is never great when the rent is unprofitable.
July 19, 2008
11:04 p.m.
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Ramm writes:
In Loveland they both are very near local owned shops which beat them hands down service and product. adios sbucks