Thinking outside the big box: Construction trends in vacated retail space

 
Updated 9/17/2018 11:07 AM
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  • Chuck Taylor

    Chuck Taylor

Vacant big box retail space continues to be readily available in the commercial real estate arena, particularly as national brands like Toys R Us and Sears shutter multiple locations -- including many across the northwest suburbs. As a national commercial contractor specializing in retail construction, Englewood Construction has been directly involved in reconfiguring these spaces as well as working with our clients to take advantage of the opportunities they present for landlords and future tenants alike. Here are three insights into what we're seeing in this commercial real estate sector:

Going small on footprint

One trend we've noted across the country is retail brands revamping their in-store concepts and, at the same time, saving costs by downsizing. In the big box arena, we've worked with several retailers who are negotiating with current landlords to stay in the same location and remodel their store, but give back a portion of their footprint.

The lease terms determine if the tenant is responsible for walling off the unwanted space and adding any infrastructure to the square footage they're giving up, such as a new electrical panel, HVAC unit or a roughed-in bathroom.

We've also been tapped by owners offering these newly divided storefronts as a build-to-suit opportunity for smaller concepts to enter a well-established "power center."

In other cases, we've worked with owners and developers to divide vacated big box stores into three or four smaller tenant spaces ready for build-out. While construction itself may be straightforward in terms of demo-ing and reconfiguring the original footprint, owners still need to engage an architect and also loop in the municipality to confirm adherence to egress and life safety requirements. An architect is also a good investment since the landlord will want an updated as-built drawing to use in marketing the modified property to an entirely new group of potential tenants looking for a smaller square footage range.

Thinking big about experiences

There continues to be energy around converting existing big box space to entertainment- and experience-focused concepts. In the past, we've helped clients turn these vacated stores into recreation offerings, with everything from active sports venues like indoor soccer centers or climbing gyms, to family-friendly entertainment such as arcades and trampoline parks.

The ample square footage of a big box store is an appealing blank slate for concepts calling for wide-open areas, high ceilings and room for oversized equipment.

However, it's important to have an architect and contractor evaluate the existing structure of the store, since placement of permanent elements such as concrete support columns will determine the flexibility of the space.

With their central locations and plentiful parking, big box stores can also be well-suited for conversion to non-retail uses such as medical offices or general office space. In one recent project, we worked with a client to transform a former big box store into a trade school with multiple classrooms and student areas.

Seeking out construction savings

Big box stores are ripe for conversion and construction savings. A skilled commercial contractor can work with new tenants to identify opportunities to repurpose existing elements, from structural and mechanical items to lighting fixtures, wiring for fire alarm and sprinkler systems and even restrooms and break rooms/kitchens.

It's advisable to have a service contractor evaluate any systems, such as HVAC, prior to deciding to replace or repair.

In some cases, it may be possible to overhaul an existing system and get a few more years out of it rather than replacing it, lowering the upfront capital investment for the new space.

It's also important to be aware of any visual reminders of a vacated big box store's previous occupant, whether it's another brand's distinctive facade, or subtle clue such as signature interior finishes. Usually removing or covering up those recognizable elements is a matter of simple cosmetic construction work, but plan for any necessary "unbranding" as part of the overall construction scope and budget.

As the retail landscape continues to evolve, it is interesting to watch big box stores evolve with it -- and present new and exciting opportunities for owners, retailers and other tenants alike.

• Chuck Taylor is director of operations for Lemont-based Englewood Construction, a leading national commercial contractor specializing in retail, restaurant, shopping center, hotel, education and office/industrial projects throughout the United States.

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