When The Lights Go Out For Large Retail Spaces, How Do You Create a New Land of Opportunity?
Another day, another retail giant is closing their stores. As of early April 2019, over 5,900 store closures in the United States were announced according to Coresight Research. 2018 saw over 5,500 closures with 2017 setting the record with 8,139 closures. Debate abounds on what brought down the once popular shopping mall. The internet and ecommerce? Millennial buying habits? The resurgence of downtown living and re-urbanization? While others focus on the why, I’m left wondering about what’s next for the rising amount of shuttered real estate. Should malls actively seek new tenants, get a face lift, or be demolished?
As a site selector working throughout North America, I tend to be an optimist and choose to see opportunities versus challenges. Abandoned assets, if positioned correctly, can be transformed from a community liability to a regional asset and differentiator. An asset that can often attract investment, creative design, and new amenities. Not to mention new employers and a workforce that is drawn to a cohesive environment with community connections. It is therefore incumbent upon communities and regions to understand the vacated asset’s potential and embrace a proactive approach for resurgence.
Part of the opportunity lies in how malls often occupy large land parcels under single ownership. The value of these sites has often increased dramatically from original acquisition and much of the land is generally underutilized parking lots. In the best market conditions, these “land banks” provide valuable opportunities to spur land development. It can add needed land use and development but often lacking in suburban and some urban communities.
The implementation of such redevelopments can range widely. It can be as simple as sprucing up facades and interiors to provide new tenants, or a complete fresh start with new buildings and streetscapes. Uses can diversify into new connections to area neighborhoods with transportation options. Solutions will differ from one mall to the next due to what a community wants and needs.
To see how these opportunities play out in the real world, here are a few successful redevelopments stories happening nationwide and in the Hoosier state.
In Providence, Rhode Island, America’s first indoor shopping mall and national Historic landmark was redeveloped after closing in 2008. As of 2016, the Arcade Providence now features 48 micro-apartments on its top two floors with 17 micro retail spaces on the first.
In Indiana, the Hammond Sportsplex and Recreation Center opened in 2018, formally home to the Woodmar shopping center which closed in 2006. The 135,000 square foot, $18M facility has 6 basketball courts that can be converted into 10 volleyball courts along with 2 regulation-sized soccer fields that can double as an indoor baseball field. It also features indoor batting cages, concession area, observation area for event attendees, an elevated walking track, and community event space. It’s a remarkable example of a retail redevelopment project that expanded the vision to bring in local, regional and national events to the community.
In Columbus, Indiana, the community partnered with Columbus Regional Hospital and the Heritage Fund/Community Foundation of Bartholomew County to acquire a 30-year-old shopping mall located on 35 acres for $5.9 million. Redevelopment plans include converting the sprawling space into a community recreational and sports tourism complex.
Other communities in Indiana are also getting ahead of the retail shift issue and working to develop and deploy economic development tools to spur redevelopment activity. Particularly in areas that show signs of potential but could use some momentum. The City of Lawrence has done a great job of revitalizing older retail corridors and the former Fort Benjamin Harrison.
Many communities, regions, and states are effectively using creative Economic Development tools as a way to transition from the retail world of yesterday to the needs of today. These include the creation of redevelopment areas, tax increment financing districts, urban renewal corridors, property tax abatement districts, Brownfield redevelopment programs, and more.
In our daily work, we regularly engage with clients that are actively looking for obsolete assets that can be repositioned. In particular, assets that are well supported through creative funding mechanisms that result in a win for everyone involved, especially community residents and businesses.
So, the next time you hear of a retail space closing, be grateful for the memories of what was and look forward to what bright opportunities may lie ahead.
Leslie Wagner is senior principal for Ginovus.