Brick and mortar retail was already in a delicate balance in years past trying to tip the scales in their favor versus online retail. Required store closures in early spring as a result of a deadly virus blasted physical retail’s hope to restore fortune in its favor. To combat the brick and mortar crisis, retailers are in need of creative ways to fills their spaces.
The year 2020 has continued to disappoint with numerous bankruptcies and permanent store closures. Estimates show close to 130 million square feet of empty retail space plague our nation’s shopping centers. The reopening of retail locations are beginning to increase though incrementally and malls are beginning to find ways to keep their head above water.
To advert the crisis of increased vacancies, the type of tenant needs to evolve and shopping center owners and managers need to find them.
Below is an offering of various concepts to combat the empty retail space crisis.
This may be tricky, depending on zoning, but most growing cities have a large demand for housing. Converting a large anchor space into a small apartment development might be the right fit for a vacancy that isn’t suited well for retail. Another similar concept: Senior housing. Many senior housing establishments are relatively small compared to large apartment buildings. And plus side for the seniors? They will be within walking distance to shopping (one less ride on the senior center bus).
Healthcare has been a huge emphasis this year. Medical offices might be considering an expansion or relocation. Hospitals and other health care service locations have expanded their services to include COVID testing. For these health care centers, it can be a challenge to keep at risk or well patients separate from potentially positive COVID patients getting tested. The logistics of separating patients could be simpler if the health care center had a specific location for COVID testing, like an empty retail space. Already eight months into this pandemic with the growing sense that we are still in the middle of it, seems fair to suggest a COVID testing site could reasonably have a 1-2 year lease, at least. Once a vaccine is developed, the testing site can be converted to a COVID vaccine site, extending the lease further.
The obvious choice for a large anchor store conversion would be a grocery or other essential retailer. Several grocery stores have done very well, such as Trader Joe’s, Costco, and Target. Other essential retailers such as Home Depot, Lowe’s, and Tractor Supply Co. have also exceeded expectations and continue to expand to new locations.
Essential Service Businesses
Not all brick and mortar retail is suffering. Essential service businesses have weathered the pandemic because they don’t compete with online shopping. A few examples would be tailors, locksmiths, IT services, banking, building materials supplier, animal shelters, and laundromats.
Large retailers, i.e. Best Buy, REI, and Ikea have excelled due to online purchases for sought after products during quarantine, such as electorics, outdoor gear, and furniture.
Online retailers are realizing the necessity of warehouse space and logistic centers as they expand. Amazon has reportedly been picking up empty spaces to use as Amazon Fulfillment Centers. Call it ironic fate that Amazon and other online retailers who put a considerable amount of brick and mortar retailers out of business eventually swooped in to fill their own physical location.
In an unprecedented year with shocks to the educational system, more and more parents are seeking top-bar education for their kids. A charter or private school might just be the perfect conversion concept for chronic empty anchor space. Keep in mind important factors, such as enough parking for faculty, parents, and students in addition to a proper, safe space for the drop off and pick up carpool lanes. For smaller vacant spaces, consider a daycare or preschool facility.
For several years there has been a vastly growing ideology based on minimalism, focusing on buying more experiences than stuff. Parents cling to the notion of having less toys to clean up and children remember those peak moments from an adventurous experience. An example of an experience spot would be a children's museum where everything to see is interactive and geared towards budding creativity and learning. Other experience spots include arcades and trampoline parks.
Pop up Shops
Seasonal and holiday pop up shops are already a norm for most shopping centers. A different take is a pop up shop for retailers to try out a space for a very short lease time (about 90 days). The retail owner, perhaps one that has not had a physical location before, can sample the experience of a physical store, as well as seeing if the location fits their needs. On the other side, the shopping center owner can get a glimpse to see if this retailer will be the right fit. Another win, it fills an empty vacancy and shoppers get to try out something new. If the pop up show goes well, there is always the option to extend the lease.
In addition to retail closing up in spring, office buildings fell dark and like retail, some have not recovered. The new norm for many professionals has been the work from home environment. However, many suffer from the distractions and lack of social interactions. The trend for coworking spaces is growing. Offering flexibility to cater to freelancers, budding entrepreneurs, and even enterprises, coworking spaces have the flexibility to allow professionals to work in a designated work space without lengthy office rental contracts or extra costs for amenities.
Fear not, there are plentiful ways your empty retail space can be transformed into a thriving location. The next step is to find the right tenant for your vacancy, which can be a burdening chore. Make it easier by seeing how Retailsphere can guide you through your search for the exceptional tenant. Set up a time to meet with a Retailsphere professional today to keep the empty retail crisis away from your space.