Although the struggles of shopping malls and big-box stores aren’t new, as eCommerce has been cutting into their sales for years, the COVID-19 pandemic has been the final straw for many retailers.
Malls are struggling after having their anchor stores go out of business without other retailers to pick up the slack. Even big-name brands like Men’s Wearhouse, J.C. Penney, and J. Crew have filed for bankruptcy since the beginning of the pandemic.
Simultaneously, discount chains like Target, Wal-Mart, and Home Depot are thriving, as they provide the necessities at lower prices than many other retailers can match.
But what if a retail property doesn’t have a Wal-Mart or Target to help keep it afloat?
Developers and owners have to repurpose the space for another use. And the good news is that there are some emerging options to consider once we’re through the current crisis.
Traditional retail stores closing isn’t a new trend. It’s harder for certain companies to survive in a brick-and-mortar environment when online retailers can offer more selection and an ultra-convenient shopping experience. Many online shops also have significantly less overhead, allowing them to reduce their prices.
These changes in shopping patterns have led to various big-box spaces and malls closing their doors. But developers are turning some of these spaces into completely different entities.
For example, the Under Armour headquarters in Baltimore, Maryland, sits on a 58-acre site once home to a Sam’s Club and several other businesses.
Other reused big-box store examples include:
There are various examples of malls coming back with a new purpose, too:
There are numerous ways to repurpose former big-box stores and empty shopping malls, but the strategy might change a bit because of COVID-19.
We’re seeing less demand for corporate headquarters and other establishments that gather mass amounts of people because of the pandemic. With so much of the workforce currently operating remotely, there’s less need for larger office buildings. And some existing recreational facilities sit empty or at reduced capacity because people can’t be within six feet of each other.
So, what is the solution to these empty buildings?
It takes significant adaptation, but there are examples of commercial real estate owners repurposing empty malls, big-box stores, and other retail shops into indoor farms.
One such location is AeroFarms in Newark, New Jersey, which has indoor farms in buildings that were once steel mills, nightclubs, schools, and laser tag arenas. Today, AeroFarms operates the largest indoor vertical farm globally, producing food for people throughout the Newark area.
Another indoor farm, Wilder Fields, is currently under construction in a former Target store in Calumet City, Illinois. Once completed, it will have 24 separate rooms over its 135,000-square-foot space and produce enough crops to distribute to supermarkets and select restaurants in the area.
Medical marijuana is another crop that can thrive indoors, as is the case with a former JC Penney store at Copper Country Mall in Houghton, Michigan. The business plans to act as a dispensary that grows its products on-site in the abandoned store.
It’s also possible to turn these stores into fish farms, which are advantageous because their waste can feed other crops within the facility.
Central Detroit Christian Farm and Fishery took over a retail location from a food market and now operates an indoor fish farm featuring tilapia. The irrigation system pumps wastewater from the fish tanks to fertilize the on-site crops, creating an eco-friendly food source in a space otherwise sitting empty.
These examples of property owners reusing empty commercial buildings in creative ways provide hope for the post-pandemic world. The world is changing, but large spaces remain useful and can benefit society beyond their original purpose.
As we come out of the COVID-19 recession, some CRE sectors and buildings will fare worse than others—and various empty buildings won’t have enough tenants. Commercial real estate owners and developers will have to get creative if they wish to fill specific structures, especially as the virus’s course remains unclear.
If you’re struggling to decide on the next step for your retail property, Morris Southeast Group can help. We have our finger on the pulse of the commercial real estate environment and can assist as you adapt to the changing world.
Give us a call at 954.474.1776 for expert guidance. You can also reach Ken Morris directly by phone at 954.240.4400 or via email at email@example.com.