Outside the [Big] Box Tips for Filling Empty Retail Space

Mall and shopping center owners nationwide are faced with the vacancy of major big box anchors that have closed their doors due to the continued uptick in online retail, changing shopping habits, and desires of today’s consumers.

Often massive, these two-story, or even three-story spaces seem impossible to fill with the decline of most brick and mortar retail stores. Developers are being challenged to think outside the [big] box to find new tenants and creative uses for the space.

Malls were originally thought of as community centers for neighborhoods during the mall boom. That attitude fell by the wayside as malls removed their socially engaging aspects and lost their sense of place – instead of being a place for the community to gather, the mall became simply a place to shop. Now, largely expedited by the pandemic, there have been seismic shifts in retail, shopper habits, and what the consumer wants out of their shopping experience.

The key word here is experience. Malls have had to readapt to fill in vacant spaces from large department stores that consumers no longer favor. This has opened up a lot of atypical uses, from distribution centers to residential to entertainment components to medical facilities. We are returning to the original vision of community centers, as retail centers have changed to provide convenience in the settings consumers value.

From sourcing non-traditional tenants to confirming your team understands existing code modifications, here are a few tips for filling that box quickly.

1. Pursue Non-Traditional Tenants

As malls and shopping centers shift to “lifestyle centers,” tenants are getting more creative with where they want to be. A three-story box can be converted into multiple junior anchors, grocery, and a mix of small retail spaces. Fitness centers, movie theaters, and other “retail-tainment” tenants are seeking mall space. Even more outside the box, we’re seeing multifamily residential and senior living facilities popping up at mall sites throughout the east coast.

At the Auburn Mall in Massachusetts, a regional healthcare provider converted a 69,000 SF Macy’s home store into a two-story medical office building. Bohler’s team provided design for the outdoor renovations, updating the curb, sidewalk, drive aisles, and landscaping. The town required utility design to incorporate a generator and modification of an existing special permit to allow for the medical office use.

2. Be Creative With Approvals

A redevelopment doesn’t always mean a full land development application process. Some towns offer waivers or an amended approval process, which is generally easier and cheaper to navigate. Your project may be permitted to follow the regulations that were in place at the time of the original development and may not be subject to the newest codes. New non-retail uses may require a lesser parking ratio, leaving you with a surplus. Be sure your consultant team is on top of their game.

By creatively reallocating leasable space, the Plymouth Meeting Mall in Pennsylvania has been adding tenants for years, using its original parking ratio. Bohler has provided civil engineering and permitting services for the mall for over a decade, including multiple expansions and redevelopments. The most recent Macy’s fit-out features several junior anchors, as well as a fitness club and craft brewery.

Extreme redevelopment does have its place, explains Dean Cardwell, PE, a partner in Bohler’s Dallas, TX office. “Developers here in Texas are taking the redevelopment even further outside the box and will raze the mall and redevelop the entire property into a mixed-use center (sometime this includes residential, medical, office, and more). It is becoming a common scenario in the Dallas/Fort Worth metroplex.”

“Valley View Mall in Dallas and Collin Creek Mall in Plano are two recent examples that are now permitted and currently under construction,” Dean explains.

“By utilizing structured parking, the large surface parking areas are incorporated into the development to provide more leasable square footage, walking spaces, fountains, playgrounds, and other amenities as well as large patio dining areas for restaurants,” says Dean. “These are features that could not have been considered within a traditional mall footprint, and because they are desired by today’s consumer, they are high priorities for the retail and restaurant tenants. This unique confluence yields higher lease rates, higher property values, and better neighborhood and community support; everyone wins.”

3. Communication With All Tenants Is Crucial

As the project nears construction, confirming that your team and your new tenants are on the same page is key. If a tenant requires a drive-thru, a covered outdoor patio, or other special features, the sooner you know, the better. Once construction begins, certain features could require costly do-overs. Communication with existing tenants is also important. The construction phase of any expansion, renovation, or redevelopment may spill over into existing access roads or tenant space. Careful planning and phased construction can allow for those existing tenants to remain open during construction.

At the Aquia Town Center in Virginia, a 160,000 SF redevelopment called for extensive analyses of utilities, roadways, parking areas, and pedestrian crossings. Bohler’s team devised a phasing plan to minimize impact to existing tenants and to allow them to remain active throughout construction with little cost to the client.

4. Carefully Review All Permit and Approval Documentation

Whether you’re using a new consultant, or you recently acquired the property, be sure to obtain all the relevant documentation to your consultant team early on. It’s possible that a variance, modification, or condition of approval was applied to the project at some point. There could be any of the following: limitations on where drive-thrus can be located, customized parking requirements, or outparcel restrictions. It’s important to understand these conditions and limitations, and work within those parameters, rather than go back to the town to request additional modifications.

SEE RELATED: top retail trend: converting parking lots to profit

Two vacant Sears spaces at the South Hills Village Mall in Pittsburgh, PA are currently being redeveloped. Bohler wasn’t the original engineer on the project. Consequently, the team carefully reviewed older surveys, civil plans, review letters, and approval documents. With a firm understanding of the existing accommodations made by the town, the team’s design efforts were successful. A fitness club was slated to fill the standalone Sears Automotive store in the parking lot, while the interior Sears space was reconstructed to include outward facing retail and restaurants with glass storefronts and outdoor seating.

There’s no question about it, retail is changing. If you’re faced with significant vacant space, consider thinking outside the box. Non-traditional tenants like residential or medical office uses are jumping at the opportunity to be in prime locations. Consider all reasonable options when it comes to approvals and look for creative ways to capitalize on existing ones. Overcommunicate with tenants to avoid costly hiccups during construction. Understand the parameters of your permits and work within them to keep pushing your project forward.

This article was originally published by REBusiness Online