if demand(wages drive demand) is collapsing, and the economy is deflating, where is the hyper-inflation going to come from:As retailers cut back cities confront 'ghostboxes'
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deflating, where is the hyper-inflation going to come from:As
retailers cut back cities confront 'ghostboxes'
yes the government can print more money, but since they have injected
trillions of dollars in credit into the economy starting last year,
the economy is still deflating, and we see no real inflation, just
deflation.
As retailers cut back cities confront 'ghostboxes'
Communities confront 'ghostbox' buildings when big-box retailers leave
• By James Macpherson, Associated Press Writer
• On Sunday July 5, 2009, 1:15 pm EDT
BISMARCK, N.D. (AP) -- Hundreds of anxious shoppers watched as city
officials used power saws to cut 2-by-4s during Home Depot Inc.'s
ribbon-cutting ceremony for its 102,700-square-foot building center in
Bismarck. Less than three years later, the home improvement retailer
shuttered the underperforming store, leaving a big orange empty
eyesore on the outskirts of town.
The building, sitting derelict and silent on acres of asphalt, is now
listed for sale at $10.5 million. But there's been little interest in
the near windowless warehouse-like building that occupies a lot the
size of a dozen football fields.
For potential tenants "it's a hard pitch because for most uses it
seems to be a bit of a tough fit," said Brian Ritter, business
development director of the Bismarck-Mandan Development Association.
As the recession takes its toll on big-box retailers, more communities
across the country are having to confront not just the eyesore of
giant empty stores, but also the loss of jobs and tax revenue that
follow.
Many are trying to find creative uses for those near windowless
monoliths. In Minnesota, one became a Spam Museum. In Texas, an indoor
go-cart track. In Illinois, a church moved into an empty Wal-Mart. The
new tenants, however, often generate less revenue for local
governments.
And with the recent spate of bankruptcies and store closures,
including Circuit City and Linens 'N Things, more abandoned buildings
will be added to a struggling commercial real estate market. There are
already hundreds of empty "ghostboxes" around the country.
"There is not a landfill on earth able to handle all the big boxes
that we have sitting empty," says Julia Christensen, author of the
book "Big Box Reuse," who has been studying the trend since 2002.
Some have been transformed into museums, community centers, hospitals
or schools. Future tenants, however, can be restricted by the former
retail chain.
"Often, they sign leases that prohibit competitors from moving in
there, so they're willing to pay on an empty building for a long
time," said Christensen, also a visiting professor at Oberlin College
in Ohio.
The International Council of Shopping Centers said 6,913 retail stores
-- of all types -- announced closures last year, compared with 4,603
in 2007.
Excess Space Retail of Lake Success, N.Y, specializes in real estate
disposition and lease restructuring for retailers, including Home
Depot, Wal-Mart, JC Penny and Kmart. The company has seen a more than
30 percent jump in the number of empty retail locations in the past
year, he said.
"We are handing in excess of 2,000 locations for some 50-odd
retailers, said Michael Burden, a principal with Excess Space Retail.
"The square footage is in the tens of millions."
Home Depot, for example, closed 15 underperforming stores last year,
and 41 its smaller home improvement brands, including Expo Design
Centers and YardBIRDS.
"The goal is to sell or lease the property as quickly as possible,"
said Ron DeFeo, a spokesman for the Atlanta-based Home Depot. "The
last thing we want is to see an empty store in a community -- it's a
difficult enough decision to close a store in the community."
In Frankfort, Ky., an empty Home Depot is adjacent to a sign welcoming
visitors to the city.
Focusing on the positive, Phil Kerrick, economic development director
for the city and Franklin County, says, "It's a great building, in
good shape and in a good location."
Frankfort, Kentucky's capital city, has dealt with vacant big box
space before, when Lowe's Cos. moved into a bigger box in town. The
building was converted to a state office building.
In Round Rock, Texas, a former Wal-Mart was converted into a go-cart
track for a time.
City manager Jim Nuse said while the indoor racetrack was better than
having the building sit vacant, it was far from the ideal use of the
space.
The track was open for about two years until the building's owners
renovated the building to house several businesses, including a health
club, restaurant and gourmet market.
Owners of the building gave it a new facade and landscaping to make it
look less boxy to attract new tenants, all at no cost to the city.
"We were lucky," Nuse said. "It was a less-than-attractive space for
awhile but it turned out to be really nice, though it took several
years for that to happen."
Hormel Foods Corp., maker of the famous canned luncheon meat, opened
the Spam Museum in Austin, Minn., in an old Kmart building that also
had been a Sears store.
Sandy Forstner, executive director of the Austin Chamber of Commerce,
said the Spam Museum, which opened in 2002, has been more valuable to
the southeastern Minnesota community than the previous retailers, both
in terms of property tax revenue and the number of visitors it draws
to the area.
"The property has been significantly improved," Forstner said. "Hormel
has spent millions of dollars redeveloping the property."
The 16,500-square-foot building also houses the headquarters for
Hormel and offices for a hospital, he said.
Forstner said the Spam Museum is one of the biggest destinations in
the state, and has brought tourism dollars to the town of about 23,000
people, near the Iowa border.
"It's always a problem for a community when a business leaves a
building," he said. "The bigger the business, the bigger the facility
and the bigger the problem."
Wal-Mart Stores Inc. is opening 157 stores this year, but the world's
largest retailer has 147 vacant U.S. stores its trying to get rid of.
"We've been pretty successful identifying new tenants or new owners,"
said Greg Rossiter, a spokesman for Bentonville, Ark.-based company
Rossiter. "Some of the uses are pretty unique."
A former Wal-Mart in Carlinville, Ill., was converted to a church, but
not before a legal battle from the city.
Mayor Robert Schwab said retail space is at a premium in the city of
about 6,000, so when Wal-Mart announced it was building a new
Supercenter in town, community leaders were hopeful the old facility
could be turned into new retail space.
Instead, Wal-Mart sold the 50,000-square-foot building to the
Carlinville Southern Baptist Church in 2007.
"Nothing against churches, but the city loses, the county loses and
the school district loses sales tax and property tax as a source of
revenue," the mayor said.
"It was probably the largest building available in probably the whole
county," Schwab said. "There was a lot of interest in it but Wal-Mart
found a willing buyer that gave them no competition at all."
The city and the church settled a federal lawsuit last year over the
church's right to operate in a commercially zoned property, Schwab
said. The church was given and a special-use permit, and the city's
insurer paid $125,000 in compensation to the church and $50,000 to the
city in a settlement, he said.
Schwab said the city had paid hundreds of thousands of dollars in
infrastructure improvements to roads and stoplights leading the old
Wal-Mart building, built in the early 1980s.
He said the mega-retailer should have consulted with city officials
before selling.
"We should have had the right of first refusal," he said.
Bruce Botelho, the mayor of Juneau, Alaska, said when the town's Kmart
store closed in 2003, the city lost jobs, sales tax and had an
embarrassing eyesore until Wal-Mart opened a store at the site last
year.
The abandoned building was the target of vandals who painted graffiti
on outside walls and junk cars littered the parking lot. The building
also was not maintained properly during the time it sat derelict, and
the interior of the building flooded, Botelho said.
"It was no doubt a stressful time," he recalled.
Wal-Mart has relocated three times to bigger locations in Bardstown,
Ky., a community of 11,000. Two of the buildings have been filled with
more retail space, and one was torn down to make way for a new
courthouse, said Kim Huston, president of the Nelson County Economic
Development Agency
The city has imposed new design standards for big boxes and has
imposed new rules that require a building to be razed if it cannot be
sold, said Huston.
In Bismarck, the business development director says most cities are
reluctant to impose such rules on big box retailers, fearing a lost
bid for the store.
"If you do, they simply won't locate in your community," Ritter said.
"Depending on how you look at it that may be a good thing or a bad
thing."