7-Eleven is using the weak commercial real estate market to its advantage by focusing on a major expansion plan, the New York Times reported.
The company, which operates or franchises about 5,700 stores across the U.S, announced in May it would add 200 new outlets this year, and it is proceeding with its plans.
According to company officials, the most stores will be added in California, which had almost 1,300 stores at the end of 2008, and the New York metropolitan area, which had 431 stores at the end of 2008. At least 44 stores will open this year in the New York metropolitan area, more than twice the number opened last year, the New York Times reported.
Dan Porter, vice president for real estate and new store development at 7-Eleven told the New York Times the company saw the possibility of adding 350 stores in the New York metropolitan area in the next five to seven years.
Officials said the retailer is gaining access to desirable retail space that previously was not available or was too expensive.
“While the business is not recession-proof, it’s recession-resistant, and doing well, given the marketplace,” said Mike Friedman, a senior vice president of CB Richard Ellis, a real estate services firm that is helping 7-Eleven identify potential store sites.
7-Eleven has had it’s eye on about 15 sites in the metropolitan area that have now become available, according to Kenneth Barnes, manager of real estate for 7-Eleven’s Northeast division. He added that the leases it was currently negotiating featured rents more than 30% below the level of six months ago. Twenty of the new stores opening in the New York metropolitan area this year will be through the company’s business conversion program, where the owner of an existing c-store retains a space and converts it into a 7-Eleven. The company in turn invests an average of $280,000 in the store-for new equipment, furnishings, technology, etc. and it receives 25% of the sales of goods minus their actual cost.