Second-Generation Space Takes Center Stage: From the Last Kmart to Record Grocery-Anchored Deals (October 2026)

The most important story in retail real estate right now is not what is closing — it is what is moving in behind it. Across the country, yesterday’s dead big boxes and shuttered drugstores are being re-tenanted at a pace that has flipped the narrative, store closings are running roughly 44% below last year, and institutional capital is paying the richest prices in decades for grocery-anchored centers. Here on Long Island, that national story just played out in our own backyard.

The Last Kmart in America Becomes a Target — in the Hamptons

Target was scheduled to open its newest store on October 11 at Bridgehampton Commons, filling the roughly 90,000-square-foot box that until 2024 housed the last full-size, stand-alone Kmart in the continental United States. It is Target’s 109th store in New York, and it arrives with a CVS Pharmacy and a Starbucks inside — and, notably, a gray exterior rather than Target’s signature red, a concession to the town’s coastal design guidelines.

I have watched this site for years, and the symbolism is hard to miss. A chain that came to define American retail’s decline hands its final flagship to one of the format’s survivors, in one of the wealthiest trade areas in the country. That is second-generation space working exactly as it should: a well-located, well-sized box does not stay dark for long when the real estate is right.

O’Reilly’s Quiet Takeover of New York’s Dead Drugstores

The same dynamic is unfolding on a smaller footprint statewide. Following Rite Aid’s nationwide wind-down in 2025, O’Reilly Auto Parts has been systematically buying former Rite Aid buildings across New York and converting them. In the City of Tonawanda, O’Reilly paid $1.65 million for a 12,738-square-foot former Rite Aid at 47 Niagara Street that had sat vacant for two years. In Chautauqua County, it acquired the former Rite Aid at 963 Fairmount Avenue in Ellicott for $1.675 million — the third former Rite Aid in that county alone to trade. Earlier deals in Greece, Poughkeepsie, Rome, Watertown and Buffalo follow the same template.

Auto-parts retailers have become some of the most reliable backfill tenants in the business. Their prototype — 7,000 to 14,000 square feet, hard-corner or pad visibility, surface parking — maps almost perfectly onto the standalone drugstore box. For landlords holding dark pharmacy real estate, that is the single most encouraging trend of the cycle.

Capital Is Chasing Grocery-Anchored Retail Harder Than Ever

While value and specialty retailers absorb the vacancies, the institutional money has made its choice clear: grocery-anchored neighborhood centers. The headline deal is Brixmor Property Group and Everview Partners’ roughly $2.34 billion agreement to acquire Slate Grocery REIT — a 115-center portfolio. Brixmor is taking 23 centers (about 3 million square feet, 96% leased, concentrated in Florida, Georgia and the Carolinas) for $636 million, with the remaining 92 centers folded into a joint venture — Everview at 80%, Brixmor at 20% plus a roughly $174 million preferred investment yielding 9%, alongside a strategic investment from the Abu Dhabi Investment Authority. Unitholders are being paid $13 per unit, about a 13% premium, with closing targeted for the first quarter of 2027.

Phillips Edison & Company reinforced the same thesis on October 1, raising its 2026 gross acquisition guidance to $600–$700 million (from $500–$600 million) after deploying $459.7 million through September 30, and expanding its joint venture with Northwestern Mutual — which is acquiring 13 PECO grocery-anchored centers across eight states for about $377.5 million. Industry roundups this month pegged recent grocery-anchored transaction volume at roughly $4.5 billion, with at least one investor describing valuations for the category as the strongest in decades.

Retailers Are Monetizing Their Own Real Estate

The flip side of that investor demand is that operators are cashing in the dirt they own. Family Dollar closed a $74.7 million sale-leaseback on September 25 covering 47 stores totaling 387,945 square feet across 19 states — its second such deal of 2026, following a $75 million, 46-property transaction in June. Together the two deals move roughly 93 properties and nearly $150 million off the balance sheet while the stores keep operating.

Sale-leasebacks are the quiet engine of this market. For a newly private, cost-focused operator, owned real estate is trapped capital; for a net-lease buyer, a long lease to a national credit tenant is exactly the yield they are hunting. Expect more of it as rates settle and retailers prioritize operating capital over owning their boxes.

The Backdrop: Fewer Closings, More Discipline

None of this is happening in a wave of distress — the opposite, in fact. Through midyear 2026, U.S. store closures totaled roughly 3,321, down about 44% from 5,941 at the same point in 2025, with tracked retail bankruptcies falling to 10 from 32 a year earlier. Openings, meanwhile, hit their lowest midyear count since 2020 as retailers turned selective. Value and off-price names — led by Dollar General, Dollar Tree and Boot Barn — are driving most of the new growth, while the heaviest closures remain concentrated in a short list of troubled names such as GameStop, Francesca’s and Eddie Bauer.

The takeaway for owners is straightforward: this is a market defined by fewer closures, disciplined openings, and deep demand for well-located neighborhood retail. The boxes that go dark are getting backfilled faster, the capital markets are rewarding the right product, and the operators who own their real estate are finding willing buyers. For anyone holding quality retail — especially supermarket-anchored centers in strong Northeast trade areas — the fundamentals have rarely looked better.

Ken Schuckman

President & CEO, Schuckman Realty Inc.

Ken Schuckman is President & CEO of Schuckman Realty Inc., a retail-focused commercial real estate brokerage founded by Stanley Schuckman in 1978 in Hicksville, NY. With 30+ years of experience specializing in supermarket-anchored shopping centers, Ken is a CoStar Power Broker and member of X-Team Retail Advisors. He is also Co-Founder & Principal of BTF Capital Fund. SchuckmanRealty.com

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