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Repurposing Retail Space

“Before the Great Recession we had too many retail spaces. Now we have way too many retail spaces.”

– Randy White, CEO of White Hutchinson Leisure & Learning Group

It’s hard not to notice retail space vacancies around Placer County rising this year. It reminds me of the empty quiet in our streets during the Great Recession. As I reflect on what we can do about it now, I remember the creative solutions so many towns tried in 2008 to turn vacant display windows into art installations and pop up activities. These little moments of discovery along the sidewalk opened my mind to the possibilities of what we can do. Since then whenever someone reopens a storefront, I’ve been excited and curious about it.

It’s not just the little stores that are struggling, but also our multinational and interstate chains. I’ve seen the development community as a whole respond slowly to rethinking what they invest in and this may be the final push they need to make the switch. For many years big box stores were the anchors of malls and retail strips and the ‘tried and true’ way to grow commerce was to build a big box store. For example, recently this strategy was used at Sierra College Blvd and 80, where woodland was converted into Walmart, Bass Pro, and Target which anchor a host of new smaller shops. Today, department stores still represent about 60% of the anchor space within malls, according to Green Street Advisors, a real estate services firm. We have many examples of anchor box stores in our community, and whenever you see them, such as Macies at the Galleria or Home Depot on Hwy 49, you’re bound to find retail development pending on any vacant land surrounding them. 

But, these anchors have struggled since the Great Recession- in a constant battle with online retail- and it is clear now that the pandemic will topple many. Green Street Advisors reports that “more than half of the department stores anchoring America’s malls are going to close permanently by the end of next year. ” (You can read more about why these stores are closing here.) So, how are the big real estate players going to change their investment strategy? What is their version of adaptive reuse, their version of art installations in vacant windows? And which ideas do they believe in enough to put their money behind? Will it be flex space, warehousing, office or residential? Here are a few examples inspired by the recent turn of events.

What retail spaces do you see vacant in our community? What can you imagine they can be turned into?

In April 2020, developer CIM Group bought the Baldwin Hills Crenshaw Plaza in South Los Angeles for more than $100 million. They see it as a great location in downtown right next to soon-to-open light rain station. One concept is to convert the former Sears and Walmart into offices, which could help drive more foot traffic to the remaining retail. Article from Bloomberg Businessweek, Photo from Google Street View

From a construction standpoint, conversions are simple.

The former Highland Mall in Austin, Texas, looks like a typical shopping center, but it’s been converted into an expansive learning center run by Austin Community College. The College trasnformed 32,000 sq ft. of mall, once a JC Penney store, intoa sleek, open-plan learning lab. Shared workstations with more than 600 desktop computers fill out the space. The rest of the mall and the surrounding area, which the college also owns, has or will soon be redeveloped into academic incubators, office space, apartments and retail shops. Article from Education Drive, Image from facebook.
The Arcade, the oldest shopping mall in the US, located in Providence, Rhode Island, was converted into a complex of micro-apartments with mixed shops and restaurants. It so popular that 4000 people have been on the waiting list. Article and photo from Aprio

Today, people prefer to live in smaller spaces and want walkable developments rather than relying on vehicular transit.

Developers are turning a wide swath of the 41-year-old shopping center into Avalon Alderwood Place outside of Seattle into a 300-unit apartment complex with underground parking. The project won’t completely erase the shopping side of the development: Commercial tenants will still take up 90,000 square feet of retail. But when the new Alderwood reopens, which developers expect will happen by 2022, the focus will have shifted dramatically. One of the mall’s anchor department stores, Sears, shut down last year; in a sense, the apartment complex will be the new anchor. Article from Bloomberg City Lab,   Rendering courtesy Brookfield Properties Inc. 
Genevieve Marsh is an urban planner in Auburn, CA, and frequent spokeswoman for AEL.

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