Report: Landlords, burned by Kit and Ace, turn to small luxury brands to fill short term leases.
Lean Luxe has learned that landlords, while they search for long term tenants, are warming up to short term leases with smaller modern luxury brands who’ve been scrappy enough to pitch them on these spaces.
WASHINGTON, DC — When we reported in early May that Kit and Ace was abruptly shutting down all of its 36 stores across the US, the UK, and Australia — its entire international retail operation, mind you — to focus on e-commerce and its nine remaining brick and mortar locations in Canada, it came as quite the shock.
We understood that the brand had experienced some recent growing pains, but this drastic measure revealed that the internal struggles within the brand were far greater than we perceived them to be.
When the news dropped, we got the “what” and the “why”. What was missing was the “how”. What were the actual details of the closures that day, and how exactly was this process carried out? Furthermore, how big of a shock was this to Kit and Ace employees — and landlords — both of whom were totally unprepared to deal with the decision?
We’ve since learned three additional facts about this.
- First, both store employees and landlords heard the announcement at the same time. There was no previous warning or heads up to anyone, so the news caught both parties completely off guard.
- Second, and further complicating the situation, was the actual matter of the store closures. These were completed within very short window that morning — two hours, to be exact. Employees were given just 120 minutes to vacate the premises before the doors were locked.
- Third, in-store inventory, rather than being packed away and warehoused, was left behind for new tenants and/or property managers to deal with. However, that compressed timeline came with a surprising silver lining: It meant that Kit and Ace was forced to abandon its spaces as is.
A gift to the marketplace.
In their haste, Kit and Ace left store interiors completely intact — a very big deal considering just how much time and money the brand put into creating unique retail build-outs. Each Kit and Ace store was designed to tell the story of its particular neighborhood and to serve as a hip community hub. The brand commissioned local artists to design interiors, and invested heavily in creating spaces that were just as adept at displaying merchandise, as they were the intimate, invite-only dinners and in-store events they frequently hosted.
In short, these are prime retail spaces the brand essentially gifted to the marketplace. And by leaving these stores untouched, Kit and Ace left behind over 30 turnkey retail setups in key neighborhoods and cities — perfect for smart brands with the initiative to take quick action in ringing up property managers.
So what’s happening with these spaces?
In the months since, we’ve wondered just what exactly is being done with Kit and Ace’s vacancies. Are these spaces just sitting empty and unused, or other brands looking to take over these spots?
The answer to the latter, as it turns out, is yes. In particular, Lean Luxe has learned that landlords, while they continue to search for long term tenants, are warming up to short term leases with smaller modern luxury brands who’ve been scrappy enough to pitch them. And the terms, from what we’re hearing, have been rather favorable.
Argent is taking over the Kit and Ace space located in the Shay development of the up-and-coming Shaw neighborhood, owned by JBG Smith. Opening on Monday (July 31), theirs is six month term with an option to extend.
“It was really unclear what had happened. Even the coverage — it was so last minute. It was sparse and a little bit light,” said co-founder Sali Christeson, recalling the news of the Kit and Ace closures in April.
“We immediately knew there was now an anchor store that was vacant [at the Shay]. We didn’t really know the extent of them closing the store, but we reached out to [JBG] and just planted the seed. I don’t know that we were really convinced that they would say yes. Talking internally, we realized we should probably push for it, because it just made a lot of sense especially considering how long it takes to finalize leases. We went back a few weeks after the store closed and pitched the vision of being able to activate the space, and offering a great experience to customers, and generating income for the landlords.”
Co-founder Eleanor Turner chimed in: “The last thing they want is a glaring vacancy on an anchor location in a key up-and-coming development. So we felt it was mutually beneficial for everyone involved because we could activate it quickly.”
This also isn’t the only former Kit and Ace location being eyed by Argent. They’re talking to a property manager in San Francisco about taking over a second Kit and Ace vacancy in the Hayes Valley neighborhood. That location had fielded competitive bids in upwards of $22,000 per month, and just a few weeks ago finalized a deal with a retailer. “We asked to be connected to the retailer because our assumption is that they are working on activating the space. But we know that that takes a long time, so we’re going to pitch getting into the space in the interim, if they’re open to it.” The timeline for that, said Christeson, is as soon as possible.
Read Wall, of his namesake brand, tells a similar story. On Thursday (July 27) they’ll be opening an extended pop-up in Kit and Ace’s former location at the Bethesda Row development in Bethesda, MD, owned Federal Realty Investment Trust. “The opportunity kind of fell into our lap, almost serendipitously,” he said. “One of the landlord’s leasing agents knew our brand, popped into our shop in Shaw, and floated the idea of doing a pop-up in the Bethesda Kit and Ace space. . . . [It] was a no brainer for us. . . . When we toured the space, it looked like they could have come back the next day and opened for business. The build out was very high end and extensive.”
As for the terms: “The initial pop-up term is up to a year with an option to renew. If the landlord finds a long term tenant, though, we may be out sooner.”