With even more Sears and Kmart stores closing at the end of the year amid the parent company’s bankruptcy filing, there are going to be even more empty storefronts in communities across the country. Those vacant big box stores, which can be tens of thousands of square feet in size, present unique challenges to communities, economic development officials and urban planners.
On Monday, Sears Holdings officials announced the company was filing for Chapter 11 bankruptcy protection and shedding an additional 142 Sears and Kmart stores, including the Kmart location in Middleburg Heights.
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The bankruptcy announcement followed a decade’s worth of slumping sales and suffocating debt. The company’s fall from grace makes it the latest victim in the so-called Retail Apocalypse, which resulted in the closure or announced closure of a record number of stores across the country in 2017. The downward trend continued in 2018 as more and more people made the transition to online shopping.
So what can be done with all those large vacant buildings? It’s a simple question with an incredibly complex answer, experts said.
“Finding another big retailer that wants to step in that space given what else is in the area, that’s part of the challenge,” said Daniel Shoag, a visiting associate professor at CWRU’s Weatherhead School of Management. Shoag, who has a doctorate’s degree in economics, is also an assistant professor of public policy at Harvard University.
Experts said the ability for a big box store to be re-purposed into something new comes down to two important challenges: finding a retailer or other tenant interested and willing to invest in the property, as well as finding a property that is large enough to accommodate the tenant’s needs.
Take the newest development in Brooklyn, for example.
On Brookpark Road near the Brooklyn-Parma border, the former Super Kmart, which stood vacant for nearly a decade, was recently demolished to make way for a Menards home improvement store. According to Andi Udris, the economic development director for the City of Brooklyn, the Menards development was primarily driven by the private sector. Udris said the available space and the land’s proximity to interstate highways made it an attractive option for Menards, which has steadily been increasing its footprint in Northeast Ohio.
Debra Janik, the senior vice president of business and physical development for Greater Cleveland Partnership, echoed Udris’ sentiments. Janik said from a development perspective, economic development officials have to go back to the basics by identifying and leveraging a particular site’s amenities.
“It’s extremely challenging. These buildings are made to standards that are specific to retail in a sea of parking lots,” Janik said. “You can’t always have Amazon fulfillment center take the place of a dead mall.”
Janik and Udris said many big box retailers are shifting more toward regional developments instead of your traditional neighborhood strip malls. However, many of the existing buildings in those locations, especially those in the neighborhood strip mall setting, generally are much smaller than what’s required by today’s retail demands.
“You’re looking at stores that are 100,000 or 150,000 square feet, where stores [these days] are 200,000+ square feet,” Janik said.
That’s part of the reason many former big box stores will stay empty for years, except for the occasional pop-up Halloween decoration store that will occupy the space for a few weeks each year.
“It’s very hard to find another tenant that can easily step into these shoes,” Shoag said. “Those kinds of vacancies can really be a drain on the neighborhood.”
For the properties that are either too small, too out-of-date or already are in a saturated market, economic development officials are forced to get creative. For example, former Kmart stores can sometimes be used to house call centers, light manufacturing or even community centers. Either way, it’s a challenge, Shoag said.
“Often you have traffic set up to accommodate these big retailers,” Shoag said. “ Traffic patterns change. It’s challenging for urban planners to think about re-using these spaces.”
