For decades, big box retailers boomed, guzzling up smaller stores that couldn’t compete at the level of these larger retail locations that offered more and variety for usually a lower price. But the growth of the online retail stores has changed the game for everyone. Instead of having to get out of your house and drive to a store, you can now place an order online and get the item shipped and delivered to your home within hours to a couple of days. Online retailers such as Amazon have started offering these fast track delivery options such as Amazon Prime which have been grooming consumers to take advantage of the convenience factor instead of going into traditional stores. Instead of driving to a big box store, our purchases come directly to us. As a result, 2017 saw a record-breaking 6,700 store closures, including big box stores like Kmart and more specialty retail outlets like Teavana. The Toys R Us shutdown shows things are only getting worse for big box companies.
Due to this change commercial real estate trends are going to change drastically in the market.
Currently, in 2018, architects, investors, and activists think about what are these huge empty storefronts and their expansive parking lots now that the companies have closed down? Some online companies can consider buying these spaces for their warehouses or some stores who may have moved from retail to online can maybe convert their stores to storage as well instead of disowning them altogether. A real example of this would be Toys R Us. Amazon, who was the online competition that had caused Toys R Us to become bankrupt is showing interest to purchase some of the empty stores abandoned by Toys R Us. They will not only use these stores for their office space and warehouses, but they also plan to open Amazon branded smart technology stores which may slowly dominate the market. However, even a company the size of Amazon cannot use up the 10,379,714,043 square feet of retail space in the United States and therefore, the potential is endless for the never ending availability of retail space.
Trick or Treat?
Real Estate Partnerships can be another way these empty storefronts can fill their space with retailers at least on a temporary basis. For example, in Houston, Texas and other states as well, Halloween pop up stores are one of these ways. Spirit Halloween is a store that has started to take up retail stores space from the months of September through the first couple weeks of November to transform these locations for a one stop shop for Halloween goods. Pumpkins with scary faces, life-sized dolls of scarecrows and horror villains, giant stuffed spiders and corn stalks decorate the store. Hundreds of costumes and scary masks line aisles and more. Surprisingly the seasonal Halloween industry is worth a staggering 9.1 billion dollars. Most of the companies pay anywhere from $25K to $45K for three months in a location, with the price depending on the size of the space, which could range from 7K SF to 30K SF.
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