Tag Archive for: big box store redevelopment

Panelists spoke at the RealInsight’s Florida Commercial Real Estate Summit at the Hyatt Regency Miami on Wednesday, October 16, highlighting the potential for distribution centers, hotels, shopping malls, technology hub and sports stadiums in Florida’s major cities.

Despite years of continuous activity, Florida’s industrial and multifamily sectors still have room for growth,  said Crocker Partners Managing Partner Angelo Bianco, Mitchell Property Realty President Ed Mitchell and Merrimac Ventures President and CEO Dev Motwani.

“Industrial is where we get our stuff,” said Mitchell.

His company recently bought industrial warehouses in Fort Lauderdale and Tampa, and is soon closing on one in Miami.

“Capital lenders are all over you. It’s nice. Everybody wants to do industrial now,” Mitchell said when asked how capital partners influence his acquisition strategies. “But land costs present a challenge. It costs more to get land in Miami than to build.”

The average land acquisition price per square foot costs $60 to $70 a square foot.

In Boca Raton, Crocker is creating a campus with a food court and STEAM lab maker space, hoping to draw a tech company.

“The idea is to make the workplace like a hotel.” Bianco credited WeWork for the concept. “Their loss is our gain,” referring to the company’s recent woes.

The retail category drew little enthusiasm from panelists, especially at this time when national chains are flailing.

“The spaces are of interest only when there is a big box that you can tear down and add multifamily,” said Motwani. “Multifamily developments continue to generate strong returns, especially in the luxury market.”

As for why affordable projects don’t draw greater interests, Motwani pointed to the financial realities.

“Concrete costs what it costs. Land costs what it costs,” said Motwani. “From a financing perspective, it makes sense to get luxury condos done, not affordable housing.”

But municipalities can encourage affordable housing development through incentives, including fee relief, parking ratios and adding density bonuses, agreed Motwani and Bianco.


Source: Miami Herald

The likely liquidation of Toys R Us, the nation’s largest independent toy seller, could add stress for the companies that make toys and games, and mean changes for the owners of the strip malls where most of its stores are. Not to mention its impact on more than Toys R Us‘s 30,000 U.S. workers.

Here’s a look.

What Happens To Toy Makers?

Toy companies, both big and small, will lose a place to test new toys. Toys R Us was a launchpad for emerging trends and toys, such as ZhuZhu Pets, which were the must-have holiday toy in 2008.

“Toys R Us was known as an incubator,” said Jim Silver, editor-in-chief of toy review site TTPM.com.

The toy makers will also have to find new places to sell their goods.

“The bigger toy makers — Hasbro and Mattel — will likely hurt at first, but then find their footing at Walmart, Target and Amazon,” says Richard Gottlieb, a consultant at Global Toy Experts.

Toys R Us accounts for about 11 percent of Mattel’s annual sales and about 9 percent of Hasbro‘s annual volume, analysts estimate. Both have posted lackluster financial results of late, and there was talk last year about the possibility of a merger between them.

But smaller toy companies will have a harder time. Silver believes they will be hurt more than Mattel Inc. and Hasbro Inc. since Toys R Us could account for up to 40 percent of their overall business. And big stores, such as Walmart and Target, are less likely to sell smaller brands because they have less space to sell toys. Stephanie Wissink, a toy analyst at Jefferies, wrote in a recent note that small companies will explore selling themselves to survive. She thinks that Hasbro and Mattel will be best positioned to add more small- to medium-sized toy makers to their portfolios.

What Happens To The Real Estate?

Real estate executives offer different opinions on whether landlords can easily fill the holes at the strip centers where most of the Toys R Us locations are.

“Given the chain’s issues, the closings aren’t a shock to landlords, and they’ve already been trying to line up possible tenants to replace Toys R Us over the past few months,” said Katy Welsh, a senior vice president at the southern Florida division of the commercial real estate brokerage firm Colliers International.

Welsh says she’s been working with a number of companies like Glowzone, an entertainment park, and Lucky Markets, which offers beer tastings in its stores, which would be interested in taking some of the spaces nationwide.

“You have to look at this as an opportunity to reposition that store,” Welsh said.

But Suzanne Mulvee, director of research for CoStar, a real estate research firm, says that 51 percent, or 450 Toys R Us’s stores are in shopping centers considered low-quality. So landlords could struggle to replace them with tenants at similar rates — or worse, they could remain vacant, she says. She says she also believes that matching the size of the box, which average about 30,000 square feet, could be difficult as well.

“The sweet spot seems to be boxes that are under 25,000 square feet, ” Mulvee says.

What Happens To The Brand?

Toys R Us, as a well-known and long-lasting brand, may yet have a future — the company even quoted its classic jingle in its bankruptcy filings. And other seemingly dead retailers have a way of coming back to life.

American Apparel, which closed all its stores last year after filing for bankruptcy, was revived by another company as an online-only clothing store. FAO Schwarz, which Toys R Us once owned, is opening shops inside department stores in the U.S. and China. And Sharper Image, which also shut its stores, now sells gadgets online and opened a New York pop-up shop during the holidays last year.


Source: Miami Herald

Just off Independence Boulevard, workers are resurrecting an old Super Kmart into a new incarnation: A call center and office space, the latest example of owners finding new uses for a defunct big-box store.

Over on Arrowood Road, a former Walmart is also being reshaped into office space and a call center. And on Freedom Drive, workers are renovating another former Kmart into a charter school.

It’s happening across the U.S.: More developers are looking at how to creatively reuse empty big-box stores, titans of the American retail landscape that now face ever-increasing pressure from online retailers and specialty shops. Elsewhere, empty stores have become libraries, gyms, even churches.

“It’s a cool repurposing of the buildings,” said Tom Fitzgerald, vice president at JLL, which is marketing the former Super Kmart, now known as INQ@2401.

The interior of a former Kmart and Steve & Barry’s store on Sardis Road North in Charlotte, NC. The store is one of several vacant big box retailers that’s getting a new life – in this case, as office space. (PHOTO CREDIT: Ely Portillo Charlotte Observer)

The store was most recently a Steve & Barry’s apparel shop, before that company went bankrupt. Verizon has signed a lease for more than half of the 165,000-square-foot building, and is planning to move hundreds of workers to a new call center there this fall.

Kmart is owned by Sears Holdings, a company that’s been shuttering hundreds of stores in a bid to survive. In January, the company added its Concord store to the list of closures. Department stores such as Macy’s and JCPenney have been aggressively closing stores to try to boost their results, while companies like Walmart and Target that opened thousands of new mega-stores in recent decades are throttling back their store counts, trimming unprofitable locations.

And when those stores close, they can leave a big hole – especially when they’re standalone stores surrounded by acres and acres of parking. The empty parking lots and giant, fading shadows of store logos are hard to miss, and they send an unmistakable signal: Hey, this place is struggling.

But the very things that make empty big-box stores such prominent blights when they fold can also make them attractive targets for redevelopment. High ceilings, totally open floor plans and walls that can be knocked out for big windows mean the buildings work as office space. And the huge parking lots that the buildings come with mean they can offer exceptionally high amounts of parking free to employees – eight spaces or so per 1,000 square feet, well above what even most suburban office parks provide. All those parking spaces and wide-open floor plans mean tenants can fit a large number of employees into a dense arrangement of workstations, making an empty Kmart or Walmart particularly conducive to rebirth as a call center.

That was part of the allure for White Oak Real Estate Advisors, which bought a former Walmart on East Arrowood Road for $3.8 million last month. The building had been owned by the adjacent Victory Christian Center, which used it for various purposes, including a Salvation Army center. Now, work is underway to turn the building into high-density office and call center space. The building has a high parking ratio – again, eight spots per 1,000 square feet of office space – and is also adjacent to the Arrowood Station on the Blue Line light rail.

Jessica Brown of Cushman & Wakefield, who is marketing the property to prospective tenants, said that combination of light rail access and lots of parking means companies can fit even more employees into the building.

“You can stack the density even greater if you need to,” said Brown. Another important advantage a reused retail building has over a new structure: Quicker construction and fewer delays. You know for certain you can deliver it within a specific time frame. The ability to deliver quickly, with no variables, is huge.”

The Movement Foundation is on track to open a new charter school this year on Freedom Drive, in a defunct Kmart the group purchased for $4.3 million. The nonprofit, affiliated with Movement Mortgage, is spending almost $8 million more renovating and refurbishing the property.

‘It Was In Terrible Shape’

When Peter Tonon saw the vacant Super Kmart on Sardis Road North, his first thought was: “When I moved here 22 years ago, that was the first place I bought diapers for the kids. It was in terrible shape,” said Tonon, a partner at Mainstreet Capital Partners. But he saw potential in the site, which he bought in 2015 with DRA Advisors for $3.4 million. Now, with a new roof, HVAC system and windows, and Verizon leasing more than 90,000 square feet, Tonon said the investment is paying off. About 72,000 square feet are still available.

Even with the renovation costs, Tonon said buying a dead big-box store is more cost-effective than building new, especially with construction costs rising. Also, there aren’t a lot of sites that large within the city limits that have so much parking and a large structure already built.

“We’re in it for a lot less than it would cost to build this kind of thing,” said Tonon. “To get 24 acres and lay out that parking, wow. That’s pretty tough to do. Maybe out in the sticks.”


Source: Miami Herald