99 Cents Only stores are closing. What happens to them next?

The once-bustling parking lot of the 99 Cents Only store on Spring Mountain Road was quiet Wednesday, occupied only by a flock of pigeons.

The store had closed, no one was inside and there appeared to be nothing on its shelves. This was also the case for the 99 Cents Only store near the intersection of Charleston and Decatur boulevards.

In April, the retailer announced that all 371 of its stores would be closing, and it now seems several stores in Las Vegas have been shuttered. There are 18 99 Cents Only stores in Clark County, according to the company’s website.

The stores’ closure could open up about 425,000 square feet of retail space in Southern Nevada, according to data from CoStar Group Inc., a real estate analytics company. And local real estate experts said that space could be used in many different ways, since there is a strong demand for large retail properties in Las Vegas both for grocery uses and more unique retail concepts.

‘Favorable’ real estate

The profile of the 99 Cents Only stores in Southern Nevada is “favorable,” said Hillary Steinberg, the vice president of retail for Avison Young’s Las Vegas office. She said these properties will be desirable since many are stand-alone buildings and anchor smaller retail centers.

The average size of the 99 Cents Only stores is 23,600 square feet, according to CoStar’s data.

Steinberg said there is a limited supply of these types of spaces in Las Vegas.

“We are at one of all-time highs as far as lease rates are concerned,” she said. “We don’t have enough retail currently on the market. But very much like the housing situation, they just haven’t been building it fast enough.”

Overall, the vacancy rate for the Las Vegas retail market in the first quarter of 2024 was 4.2 percent, with the average asking rental rate at $1.66 per square foot, according to a report from Colliers International. The vacancy rate is slightly lower than the same time last year, while the asking rental rate is only slightly higher.

It’s unclear how quickly the 99 Cents Only stores’ real estate will hit the market, as the company didn’t respond to questions. Steinberg said it’s likely that not every store will hit the market at the same time, since each one should have unique lease terms and owners who probably have different plans for these locations.

“Owners might be looking at it and saying this is a good opportunity for them to take that (99 Cents Only store) and maybe create two restaurants out of it, or take that pad and start looking for national or international retailers to take that space,” Steinberg said.

What could replace 99 Cents Only?

The tenants that replace the 99 Cents Only stores could be varied, said Isabella Sorrentino, a senior associate at ROI Commercial Real Estate, who helps oversee leases for Sprouts Farmers Market in Las Vegas. But she said there is still strong interest in keeping the 99 Cents Only locations as discount grocery brands.

“I definitely have heard that there are those bargain grocers that are drooling over a lot of those locations,” she said. “I think a couple of them are going to get them and I do think that would actually be a pretty good fit for some of the locations.”

This is already happening as Dollar Tree, another bargain retail brand, announced Wednesday it was taking over 170 of the 99 Cents Only store leases across Nevada, Texas, California and Arizona. Dollar Tree didn’t respond to questions on the number of Las Vegas locations it would take over.

But Sorrentino doesn’t think it makes sense for every 99 Cents Only store to transition to a different discount retail store.

“I think there are other locations where landlords took in 99 Cents just because they built a really large center, and they needed to fill space,” Sorrentino said. “For those centers that are kind of now in nicer areas, I think those are going to change uses.”

Steinberg said there is such a varied interest in this type of retail space in Las Vegas that several of the locations will likely move away from grocery uses.

“You’re seeing concepts coming into town that may not have had the ability previously because these types of smaller junior anchors are going to become available,” she said.

For example, there could be interest in placing experiential retail businesses such as escape rooms or ax throwing into the locations, Steinberg said.

Next steps

Neither Sorrentino or Steinberg know how quickly the 99 Cents Only spaces could get filled. But they said the locations in more affluent areas of Las Vegas are likely to have a higher interest in replacing these stores.

Steinberg expects that any tenant looking to take over a store location would want to launch operations before the holiday season starts and would want to get leases signed sooner rather than later, since most tenants would need to renovate.

Contact Sean Hemmersmeier at shemmersmeier@reviewjournal.com. Follow @seanhemmers34 on X.