Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)
Issue link: https://sct.epubxp.com/i/122387
DEPARTMENT STORE OUTLETS SUCH AS LAST CALL BY NEIMAN MARCUS AND NORDSTROM RACK ARE MOVING INTO FORMER BORDERS STORES IN TEXAS. Investments. But many owners stuck with prerecession-priced notes continue to take losses on big-box leases to keep their in-line spaces leased, he says. Some big-box centers are getting entirely repurposed under new ownership. The 230,000-square-foot Home Center Murrieta (Calif.), in Riverside County, once occupied exclusively by furnishers, lost Ethan Allen, Thomasville and Wickes to the recession and went into receivership. New owners rezoned the complex, renamed it Murrieta Crossings and brought in such entertainment elements as AntiGravity Sports (a 34,000-square-foot trampoline and game complex), a BrewLigion Brewhouse & Grill, a comedy club and a skating rink. "After the recession, entertainment became the The long, deep interiors of older bigbox stores are tough to refill completely. Some owners have been able to open a second side for retailer frontage. 216 SCT / M a y 2 0 1 3 right use," Burns said. Garden City Shopping Center, in Cranston, R.I., underwent a similarly successful theme makeover. The 65-year-old center lost Linens 'n Things in 2008, Circuit City in 2009 and Borders in 2011. Even so, that was no death knell. "It gave the center an opportunity to reposition itself for an even better mix of specialty retailers," said Gene Spiegelman, an executive vice president at the Cushman & Wakefield New York City office. J.Crew, Pottery Barn and Williams-Sonoma have come in, and LA Fitness and Lululemon Athletica are under construction. "All their box space has been replaced," Spiegelman said. "We're seeing similar things happening around the country. There's still vacancy, but we're seeing some very creative and vibrant adaptive uses." In North Texas big boxes have been converted for entertainment use, schools, churches, charity offices and other things, says disposition specialist Christopher Gibbons, director of project leasing at Venture Commercial Real Estate. Spec's Wine, Spirits & Finer Foods, a Houston-based chain, remade a Tom Thumb, a Marvin Electronics and an Office Depot into Fort Worth superstores. In a 58,000-square-foot Albertsons in Dallas, the Dallas Can! Academy opened its first charter high school. "Because there's no new construction, devel- opers and retailers and some alternative users are having to look at space needs more creatively," Gibbons said. The process in the Phoenix area has been slower and spottier, though some long-vacant boxes are starting to see activity, including a Linens 'n Things in Surprise leased to Stein Mart after four years of vacancy. But there remain 130 vacant spaces 10,000 square feet or larger in the region's Southeast Valley and an additional 56 in the combined Southwest and Northwest valleys, according to Phoenixbased Velocity Retail Group. Secondary markets are starting to benefit. In the Fountain City neighborhood of Knoxville, Tenn., Virginia College School of Business and Health has taken over a Kroger. Also in Knoxville, the state's first Buy Buy Baby store opened at a Borders near West Town Mall, and Shoe Carnival and Jo-Ann Fabric and Craft are to open this year in a long-vacant Circuit City, according to local media. There are still leasing challenges. The long, deep interiors of older big-box stores are tough to refill completely, says Spiegelman. In some of the best-located buildings, owners have been able to open a second side for retailer frontage, says Weaver. Some power centers have converted parts of their back ends to medical clinics. Yet many retail landlords remain unable to bring in alternative users because of lease covenants. "In many cases the medical uses, colleges and entertainment uses are considered tenants of last resort," MacLellan said. Among the next big-box challenges will be disposition of duplicate properties from the Office Depot, Office Max merger, MacLellan says. The real estate fate of struggling Kmart and Sears looms, as does the refilling of spaces from Barnes & Noble's decision to close up to a third of its stores over the next decade. "Owners will continue to have to think out-of-the-box," said Spiegelman. "Literally." SCT