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Posted Sep 15, 2011, 9:42 PM
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Join Date: Aug 2002
Location: Toronto
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The Incredible Shrinking Megastore: Retailers Think Outside the Big Box
Read More: http://dc.streetsblog.org/2011/09/15...e-the-big-box/
Quote:
They lord over empty parking lots in Hazard, Kentucky; Twinsburg, Ohio; and Lewiston, Washington like the ruins of a lost civilization. Vacant Walmart stores are slowly decomposing in more and more American towns these days. More than 100 of them have been memorialized as part of the group Flickr pool known smugly as “They Sold for Less.” These empty husks — yet to be filled by any other retail tenant — are part of the detritus left behind by a paradigm shift in the real estate industry. Signs of the changing times, they tell us what kind of society we were before the bubble burst. Now, as the commercial real estate industry regroups, evidence is mounting that Walmart and other mega-retailers will take a much different form than they have in the past. The new American shopping experience, according to many industry observers, will be less “suburban big-box” and more “urban destination.”
- The demise of several mega-retail chains during the recession, including Circuit City and Linens ‘n Things, helped produce a vast oversupply of retail space, particularly that of the giant, boxy, just-off-the-interstate variety. Last summer, the research arm of giant commercial real estate firm Colliers International reported that there was nearly 300 million square feet of vacant big box retail space on the market — 34 percent of total retail vacancy left behind by a recession that walloped commercial real estate almost as hard as housing. Since 2008 alone, 120 million square feet of big box retail space has become available. To put such numbers in perspective, that is the equivalent of the total shopping center space in Cincinnati, Kansas City and Baltimore combined, Colliers reported.
- Walmart is joining other retailers in thinking smaller and more urban, says Ed McMahon, a fellow at the Urban Land Institute. “What the recession has made completely clear is that we have way too much retail,” McMahon said. “We are going from the era of the big box to the era of the small box.” Enter the “Walmart Express.” Generally, the opening of a Walmart store isn’t the kind of occasion that draws national media attention. Yet, in early June, ABC, Bloomberg News, and USA Today lined up in a parking lot in Gentry, Arkansas. This wasn’t a typical Walmart opening. Gentry, Arkansas is home to the first “Walmart Express,” a 18,000-square-foot, drug-store-sized prototype of the old, big-box heavyweight.
- Walmart plans to open 15 to 20 of the small stores — about one-tenth the size of a “Supercenter” — by the end of the year, mostly throughout the southeast but also including three in Chicago. By 2012, they plan to open as many as 350 a year, part of the mega-retailer’s strategy to regain its dominance over dollar retailers. Walmart isn’t the only retailer turning its sights on the urban market it once eschewed. Increasingly, retailers see urban areas as the one remaining growth market, said Bob Gibbs, a national site selection and planning consultant with Gibbs Planning in Birmingham, Michigan.
- “Retailers used to think that if they went to the edge of suburbia, that farmland would turn into housing,” Gibbs said. “They no longer want to do that. They want to be right in the middle of people, even if they’re lower-income than they’re used to.” Industry observers have long marveled that there are approximately 20 square feet of retail space for every U.S. resident, compared to three to four square feet per capita abroad. In urban areas of the U.S., however, the actual ratio is more like one resident to two square feet.
- Cynthia Stewart, a researcher with the International Council of Shopping Centers, says the movement toward urban areas is being slowed by a couple of factors. For one, urban site acquisition is traditionally more time consuming and expensive. And financing isn’t as easy to secure as it once was. Nevertheless, the market is in urban areas, she said. “That’s where the opportunities are, for sure,” she said. Another factor shaping the retail landscape has been the growth of online retailers. Again, this trend favors smaller stores in more urban locations, said McMahon.
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Another one bites the dust. A vacant Walmart in Lewiston, Washington. Photo: Flickr/Happy Vampire
WalMart's new micro-sized "Express" stores are about one-tenth the size of its Supercenters. Photo: ABC New
Increasingly, small retail locations, like Apple stores, serve as a showcase for the broader selection of items that are available online, retail industry observers say. Photo: MacStories
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