Submitted by: Tony Seruga, Yolanda Seruga And Yolanda Bishop
The retail world is in turmoil. It seems that with the rise of Wal-Mart and the large wholesale clubs, not to mention high-quality discount stores, one grand old retailer after another has gone bankrupted, sold out, or is restructuring their corporation. And commercial real estate, faced with vacant stores, is feeling the crunch. In the end, the consumer is the winner as bright new ideas that save money and add convenience replace old-fashioned ideas. But for those with shopping mall vacancies left by the changing retail world, it may feel like no one is a winner.
Change is opportunity, though. When you examine the problem of large anchor stores moving out to leave vacant store space, those shopping mall vacancies that seem so hard to rent turn into opportunities to renovate, restructure, and transform entire mall spaces from stodgy commercial icons to shining examples of creative marketing.
Most of those working in commercial real estate don’t look at this change in that manner, though. Instead, those empty spaces and shopping mall vacancies are liabilities, and the only way to solve the problem of vacated leases is to rent at lower prices to less desirable retailers.
Shopping Mall Vacancies: Older Commercial Spaces
When a mall is built around a big-box anchor store predating today’s large-size supermarkets, that anchor store’s move out is an enormous blow to the owners of the commercial real estate as well as to the smaller stores that originally moved in to take advantage of the high traffic. No modern superstore will take over the vacant store space that is now outdated and too small, but commercial real estate managers can’t break the shopping mall vacancies apart easily for smaller rental spaces.
The traditional solution is to cut rent rates and lease the shopping mall vacancies to a second-tier retailer: a large discount store, a more specialized retail space like a car parts store, even in desperation something like a large Goodwill or surplus retail store. Whichever option is chosen, it is certain to result in a downgrade of the space and of the quality and amount of traffic to your mall. But the commercial real estate manager still has to fill that vacancy; an empty anchor results in maintenance expenses not offset by rent, less traffic to your smaller stores that may result in new vacancies, and even an increase in crime, particularly vandalism.
Solutions To Your Shopping Mall Vacancies: Thinking Outside the Big Box
Commercial real estate managers everywhere have come up with a wide variety of answers to the problem of shopping mall vacancies and vacant store spaces.
Alternative Anchors
At the White Mountain Mall in Rock Springs, Wyoming, a Harley-Davidson dealership took up the space left when a department store moved out. At Lynnhaven Mall in Virginia Beach, Virginia, a space left empty by a defunct Montgomery-Ward was split between a Barnes & Noble and a Dick’s Sporting Goods. You don’t have to have a traditional anchor store; you just need a store that has enough draw to bring the traffic and that has a customer base congruent but not competing with the rest of your mall tenants.
Upgrade and Upscale
You’re going to have to change things around for your new tenant anyway; consider putting more cash in and upgrading the whole area. Older malls are nice, but some of the newest strip malls, with open space reminiscent of European plazas, are breathtaking. If customers find the outdoor and indoor areas of your mall comfortable enough to relax in, they’re going to come back. Malls everywhere have installed outdoor eating areas, parks, park like walkways, and green spaced parking lots. If a commercial real estate manager beautifies a shopping mall in a good location, smart retailers will snap up shopping mall vacancies.
Wholesale Clubs
With the sheer number of K-marts and Sears stores moving and leaving giant empty boxes behind, it’s hard to find a growing retailer interested in the size of the commercial real estate space available. There is one type of retailer that has been growing consistently for the last two decades: wholesale clubs. If it fits in with the rest of the mall plan, a vacant store space owner should not hesitate to approach this healthy industry.
One-stop Shopping
One of the reasons for big box retailers moving out is the desire to provide one-stop shopping to customers. If they can get their milk, a bottle of wine, a nice suit, and a bouquet of roses all at the same place, it’s hard to say no to the convenience. Planning an entire mall space to create a one-stop shopping experience can increase traffic as consumers discover the convenience of this particular space, and increased traffic makes it easy for commercial real estate managers to rent out their shopping mall vacancies.
Creative New Ideas
Showcase malls in Las Vegas and Orlando center around an entertainment anchor or anchors, and provide stores with extremely unique products and shopping experiences: a Lego store, an M&M store, a store focusing only on Coca-Cola, a giant Virgin Records center. The exteriors match, with lots of glitz and attractive facades. Downtown mall spaces like this, or spaces designed around other themes like historical villages or surfside towns, can reinvigorate an entire neighborhood when done properly. In cases like this, shopping mall vacancies are an opportunity, not a liability.
Really Thinking Outside The Big Box
University outreach campuses, satellite town halls, health clubs, and other non-retailers that bring customer traffic to traditionally commercial real estate can be ideal tenants for shopping mall vacancies. Remember, malls don’t have to be devoted strictly to retail space.
Fresh ideas like this can turn malls with vacant stores into living, breathing town centers, places where customers know they can get everything done yet only have to wrestle for a parking space once. There is no greater traffic draw.
About the Author: Tony Seruga, Yolanda Seruga and Yolanda Bishop of
maverickrei.com
specialize in commercial and investment real estate. As of May, 2006, they and their partners are managing over $600 million dollars worth of new projects.
Source:
isnare.com
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