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Adaptive Reuse Opportunities for Big Box Retail

MCRE Cornerstones ©

An Exclusive Feature For Monster CRE (MCRE*)

by Brian Burton

Adaptive Reuse* Opportunities on the Upswing in the “Big Box “Markets

(*Adaptive Reuse typically involves adapting or modifying an older structures or building(s) to perform new desired functions.

This increasingly popular undertaking in building utilization allows for existing buildings to be rediscovered. Without this innovative approach many buildings would be demolished for converted if they prove to be unprofitable. This methodology allows for buildings to be reconfigured to accommodate new tenant requirements .

The big box adaptive reuse projects discussed in this article are examples of buildings that changed in fundamental functions to remain a part of today’s everchanging commercial real estate environment.)

With an increasing number of defunct “big box” retailers vacating or closing their unprofitable retail properties – innovative adaptive reuse projects are having a significant impact on CRE and commercial real estate opportunities. [Both of these kinds of buildings and sites typically have surface or in some cases underground parking resources that can be difficult and expensive to find in today's markets.]

Typically underutilized big-box retail locations are being converted to smaller commercial units and it is possible we will begin to see what amounts to “cooperative” retailing in Québec, Ontario and British Columbia – and in the future this may spread to other urban locations.

Chicago based Sears Roebuck as it was formerly known, accumulated assets of $7 billion US and had over 170,000 employees. It also operated Kmart stores, is now in the process of liquidating or filing for bankruptcy. In the past it had a mail order catalogue operation that in many respects was the forerunner of online shopping, its own credit card, an extensive brand of appliances and thousands of retail operations in Canada and the US. The firm actually created many retailing innovations we take for granted today.[In some respects to firm failed to keep up with changes in consumer preferences and technology.

Defunct Big-Box Retailers

In the case of big-box retailers closing locations the list in Canada includes Sears, some Chapters locations, Target stores, 224 Staples locations, Toys R Us, a number of clothing retailers in several provinces and other “stand-alone” big-box outlets with parking resources. [Many of these big-box retail locations are likely to see conversion or repurposing as we move forward.]

In addition in Montréal and the greater Toronto region (GTA) a number of industrial properties have been successfully repurposed nearby to accommodate townhouses and other forms of affordable housing conveniently located near today’s big box locations.

Both of these kinds of projects emphasize the need for commercial real estate professionals to stay up-to-date on current and active listings because in many cases opportunities for adaptive reuse can be significant and can actually take place quite rapidly as more and more retailers adjust.

Sears Catalogue

Decline in “Bricks and Mortar” Retail Operations

Some observers feel that the apparent decline in” bricks and mortar” retail stores is the result of shoppers going “online” to shop .

Typically online shopping is fine if the product doesn’t involve fashion choices like size colour or fit. Ordering online can result in substantial delivery charges” or the product arrives and it is ” inferior to what was advertised or of low quality”. As a result “face-to-face” shopping still has a place in the market

Some also feel that the shopping experience itself has declined as a result of the move towards online shopping does have its limitations and the trend toward smaller more intimate retail operations is growing.

Adaptive reuse conversions of larger retail operations are “part and parcel’ of this ongoing trend – which is growing in popularity and looks like it’s here to stay.

Shifting consumer habits and the rapid rise of e-commerce, fueled by Amazon in particular, have driven unprecedented, disruptive and accelerating change in the retail sector over the past decade. Virtually every traditional “bricks-and-mortar” retailer—those that rely primarily on in-store sales to drive revenue and pro t—is facing signi cant challenges as a result.

Brian Burton writes a regular feature for Monster Commercial Real Estate*.http://www.monstercommercial.com/about-monster-commercial-real-estate/. You can reach Brian at blueblade49@gmail.com

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