Big box retail buildings were located throughout the United States and Minnesota beginning in the 1960s and exploded, especially in the suburbs, in the 1990s and early 2000s. However, the Great Recession, downsizing and changing consumer tastes greatly impacted the occupants of these structures, such as Wal-Mart, Kmart and Target, which sold a large assortment of certain types of merchandise. Many retailers have now closed these stores and left huge, cavernous and unoccupied structures. This downturn has presented a large commercial real estate challenge for developers and owners.
The big box retailers suffered immensely because of the recession’s length. The rise in internet commerce also lowered demand for these large stores, because shoppers can use technology to seek the best bargains among many stores. During the recession’s high point, there were 80 vacant big box stores in the Twin Cities real estate market, while there were still 32 of these empty structures at the close of the first quarter of this year.
Developers are now making unconventional uses of these structures. Many are becoming medical offices and clinics. The Alina Health Clinic in St. Paul’s Highland Park was formerly an Old Country Buffet, for example. The Myth Nightclub in Maplewood was a former Just for Feet sneaker store.
The vacant Block E complex will undergo a $50 million renovation to become the new Mayo Clinic Square, a sports clinic and a practice facility for the Minnesota Timberwolves and Lynx. This complex earlier housed Borders, Gameworks and Hooters.
The closed stores are still attractive sites for development because of their prime locations. Retailers such as TJ Maxx, Homegoods, Gordmans, and Total Wine & Moore are taking over these sites. Top retailers are now reviewing baby boxes, which are smaller versions of these stores.
The evolving economy and consumer tastes constantly change the real estate market. Legal advice will help expedite commercial real estate transactions to keep abreast of these changes.
Source: The Minneapolis Star Tribune, “Empty big boxes are finding new purposes in Minnesota,” Janet Moore, July 5, 2014