With loss of Cost Cutter, Bellingham's Sunset Square has big retail holes to fill

THE BELLINGHAM HERALDAugust 20, 2013 

Sunset Square

Nearly surrounded by empty business space, Linda Chowning looks for one of the open businesses, DD Nail and Skin (not pictured), at the Sunset Square shopping center Monday, Aug. 19, 2013 in Bellingham. "A fair amount of the business are not readily seen from the street," Chowning said. "Location, location, location."

MATT MCDONALD — THE BELLINGHAM HERALD Buy Photo

BELLINGHAM - While large empty retail spaces on Bellingham's north side are filling up with new tenants, Sunset Square on the east side of town soon will have a big open space that could be difficult to fill.

With the announcement late last week that Cost Cutter will close its Sunset Square store later this year, a little more than 67,000 square feet of retail space will be available. Add that to the 11 spaces totaling 45,518 square feet of retail space that is currently available, and the vacancy rate for the center jumps to nearly 30 percent.

Sunset Square has 378,621 square feet of leasable space, according to Kimco Realty, which manages the property. A phone message left for a Kimco Realty leasing representative seeking comment on Sunset Square was not returned.

It's possible the Sunset Cost Cutter space won't remain empty for long. Grocery giant Safeway is taking over operations of the Sunset Cost Cutter pharmacy, which will move into a vacant space adjacent to the store, said Sara Osborne, public and government affairs director for Safeway Inc. in an email.

When asked whether Safeway would open a grocery store in the Bellingham market, Osborne said it's something the company is looking into. Safeway has a store in Lynden and used to have stores in Bellingham until it left the Whatcom County market in 1993.

"Safeway would be thrilled to return to Bellingham, and is carefully considering the opportunities that Cost Cutter's departure has created," Osborne said in the email. "There are many complex aspects when selecting a location for our stores, and we want to be certain all requirements are met in order to provide the best service possible to new and returning Safeway customers."

If Safeway decides against going into Sunset Square, local commercial real estate agents believe it would be a challenging space to fill. If it couldn't attract a large tenant, breaking it into small spaces would be difficult because the space is so deep, said Ryan Martin, a commercial broker for Windermere Real Estate/Whatcom Inc.

With the announced closure of Cost Cutter and the closure of the 15,736-square-foot movie theater in December 2012, Sunset Square is going through one of those down cycles that can hit a retail center, Martin said.

"Right now (the Meridian Street shopping area) is the hot spot for retailers," Martin said. "Retail activity is extremely strong in the north part of Bellingham right now. Retailers recognize that's where the Canadians are shopping."

With the high number of vehicles traveling along East Sunset Drive each day, it's a bit puzzling that Sunset Square is dealing with so many vacancies, said Erin Sundean, a Bellingham commercial real estate agent and owner of the Bedford Group. He noted that sometimes when a retail center loses a significant tenant, others follow suit and it can be challenging to stop that momentum.

One section of Sunset Square that appears to stay busy is the strip of standalone restaurants that bump up against East Sunset Drive. Eateries such as Jack in the Box and Starbucks appear to draw people into the center for a quick meal or refreshment, Sundean said. Taco Bell also recently submitted a building permit application to build a drive-through restaurant in the Cost Cutter parking lot area, near the Orleans Street intersection.

Sunset Square had a variety of staggered openings in 1989 and 1990, a project that cost $30 million then. The 43 store openings in that time included Round Table Pizza and Fashion Bug, joining The Fair grocery store (which would later become Cost Cutter). In a Sept. 29, 1990, article in The Bellingham Herald, Sunset Square's developers considered it a strong draw for Canadian shoppers, along with the recently opened Bellis Fair mall.

Along with the Sunset Cost Cutter, The Markets LLC announced last week it also will be closing its Meridian Cost Cutter store later this year. An undisclosed retail tenant will be moving into that 73,000-square-foot space.

STORES TO CLOSE


View Cost Cutter in a larger map

Reach Business Editor Dave Gallagher at 360-715-2269 or dave.gallagher@bellinghamherald.com. Read his Business Blog at bellinghamherald.com/business-blog or follow him on Twitter at @bhamheraldbiz.

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