Upcycling for Retail Sites: Reuse, Renovate, Repurpose

Retail sector: glass is half full

Just in time for Halloween comes the next batch of scare headlines about retail store closings. This round was prompted by Toys ‘R’ Us finalizing the closing of its 700 stores. If you didn’t read any farther, you’d come away thinking the forecast for brick and mortar retail was all doom and gloom. But as usual, that not the whole story.

“…every 15 years or so, we blow up retail concepts and reinvent new ones,” said KC Conway, Director of Research & Corporate Engagement at the University of Alabama. “A year in retail is like leap-year every year—four times as much change gets packed in because disruption is just more pronounced in retail given its direct link to the consumer. There is not an apocalypse in retail nor a decline in consumer spending.”

In fact, by the time the Halloween candy is sold out the headlines may be proclaiming the opposite, according to Ana Lai, a Standard & Poor’s retail real estate analyst. In a conversation with ICSC, she predicts many of those 700 Toys ‘R’ Us stores “…will be re-occupied by the time the holiday season begins, and even more of them will have new occupants within a year.” She attributes this rapid turnover to the fact that “…many of those stores occupy prime spots in California and in the Northeast, regions in which property is expensive, and filling existing shop space is a lot cheaper than building new.”

While anecdotes aren’t data, we’re seeing this pattern repeating itself across the retail real estate landscape: older sites are in high demand as targets for redevelopment and reuse and mixed use is helping to revitalize sites thought to be obsolete. Landlords such as Federal Realty Investment Trust and Urstadt Biddle Properties are taking note. As Bill Read, executive vice president of leasing, acquisitions and business development at Retail Specialists said to ICSC, “Most [Toys ‘R’ Us sites] are around successful malls with high barriers to entry, solid demographics and high incomes; the locations by ‘B’ and ‘C’ malls may take longer to sell or lease.”

Technology is the key to allowing retailers to efficiently identify the sites that are prime targets for reuse vs. those with hair-raising, high-risk environmental issues. Streamlining workflow allows retailers to quickly complete property due diligence in time to secure the most attractive sites before competitors.

Want to dig deeper? We’ll be discussing these topics and more with industry experts Gregg Katz,Director of Innovation & Technology, Atlanta Shopping Center Group and Stephanie Cegielski Vice President, Public Relations, ICSC during a webinar on November 7, 2018. You can learn more and register here.