James P. Cozza – Vice President
From former grocery stores to sports parks to big box retail outlets, real estate owners are finding innovative and new ways to repurpose vacant space. Recently, owners have seen non-traditional office uses, lifestyle/entertainment outlets, and medical offices take over these vacant spaces. The driving factor behind all of this – online consumer spending. Over the last five years stores such as JC Penny, Sears and Macy’s have all seen a significant decrease in retail spending and as a result, have been closing doors and downsizing across their entire portfolios. Reports have calculated that in 2017 closures surpassed 105 million square feet and in 2018 closures surpassed 90 million square feet. What has this has meant for Landlord? OPPORTUNITY!
Here are three uses in particular that have been a part of the lease-up of these spaces.
- Medical Facilities – One very popular way to bring foot traffic and life to a vacant space is a medical office. Medical offices and facilities have been very excited about adding this type of real estate to their portfolio. It seems like a no-brainer considering the “retail” exposure, abundance of parking and ease of access for patients. Local to Central Massachusetts, Kelleher & Sadowsky Associates brokered the transaction of Reliant Medical Group to occupy approximately 90,000 square feet of space at The Auburn Mall. What was once an underperforming Macy’s Home store, is now a state-of-the-art, modern medical facility housing primary and specialty care, as well as physical therapy operations.
- Corporate Offices – It would seem like a shame to let thousands of square feet of highly efficient floor plans go to waste once mall sales trend downward. Corporate Offices have shifted from a dated layout of perimeter offices and large conference rooms to efficient, open concepts where collaboration is encouraged. This trend in corporate office construction meshes seamlessly with vacant retail space. As an example, Google erected its new 500,000 square foot Google Glass headquarters in California’s Mayfield Mall when it shut down in 2013. Amazon also recently released plans to construct its latest fulfillment center in a dilapidated Ohio mall. With tech giants like Amazon and Google believing in this repurposing – owners should feel very confident pursuing this option!
- Lifestyle Centers/Modern Day Malls – According to Bloomberg, “Owners have offered another potentially profitable way to repurpose abandoned retail space. Shopping malls are dead gone, but restaurants, live music and weekend date nights are not. New York developers have turned a sunken mall landscape into a bowling alley, comedy club and an indoor-rope climbing course.” Many malls have played copy-cat to outdoor shopping centers. Multiple malls, including The Natick Mall have utilized the ever popular Wegman’s grocery store, as a way to attract shoppers and foot traffic to their other retail stores. The large problem with brick-and-mortar shopping malls have been keeping shoppers inside the outlet after the desired purchase has been made. The transition to lifestyle centers and adopting modern shopping trends will predictably keep consumers occupied and shopping longer.
These are just three of the many uses that have taken over the large vacant boxes of space. Other uses have included apartment complexes, restaurants and even large churches. As long as these stores close doors and spaces become available, motivated owners will continue to find profitable and innovative solutions to their vacancies. As RetailDive said perfectly, “Retail is not dead. It’s just changing.”
Jim Cozza is a Vice President at Kelleher & Sadowsky. He specializes in lease negotiation site search selection, tenant representation, buyer representation, sales and acquisition of office, industrial and investment assets. He can be reached at [email protected] or 508-635-6782.