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Big-box vacancies leave remaining stores struggling

Big-box vacancies leave remaining stores struggling


More than 7,000 retail stores closed nationwide in 2017, as a sector many analysts say was already overbuilt adjusted to the growing popularity of one-click online commerce.

Northwest Indiana and the south suburbs lost countless stores, including Best Buy, Kmart, Sears, Carson’s Clearance Center, Gordmans, HHGregg, MC Sports, Sports Authority, Gander Mountain, Big Lots, Ashley Homestore and Lynn’s Furniture and Mattress.

A lingering after-effect of the so-called "retailpocalypse" is that many of the shuttered stores were big-box megastores between 50,000 and 200,000 square feet. While At Home swooped in to immediately replace a shuttered Kmart on U.S. 30 in Merrillville, fewer and fewer retailers are looking to occupy so much space.

In fact, many retailers have been adjusting to diminishing demand by shrinking floor space. Kohl's, for instance, is looking at letting the grocer Aldi lease some of the space in its stores, similar to how Family Video has survived an age of streaming video in Northwest Indiana by renting out space in its stores to Marco's Pizza restaurants.

Hammond city officials say Carson's plans to downsize to a one-story building when it eventually closes its two-story department store at the site of the former Woodmar Mall. And Cabela's long ago gave up on building giant destination stores like its enormous 185,000-square-foot Hammond superstore, opting instead for more conventional 70,000-square-foot big-box stores.

Big boxes can be difficult to fill, to the point where Lake County Economic Alliance President and CEO Karen Laureman said her agency was looking at repurposing some for light industrial uses. The hulking buildings often stay vacant for some time, leaving the smaller businesses left behind without an anchor.

The popular and well-reviewed Tacos and Burritos restaurant in the Highland Ultra Plaza at Indianapolis Boulevard and Ridge Road for instance closed shortly after the Highland Ultra did.

Angelo's Prime manager Brian Brundage said his Italian restaurant/specialty grocery store at 1542 U.S. 41 in Schererville has been struggling since the anchor Ashley HomeStore closed. 

"It's tough for us as a family-owned business when the anchor tenant moves out of the plaza," he said. "Their name was on the marquee."

Brundage estimates about 80 percent of the foot traffic that initially came into his store popped in because they went to Ashley to look at furniture. They would peak their heads in and maybe buy a meatball sandwich or some olive oil.

"The anchor tenant provided more than enough business to make sure we we're going to be OK," he said. "But it's frustrating. We pay the same amount of rent to the bank as we did when Ashley was here, but now we're not getting any foot traffic from Ashley. I just hope that space doesn't stay vacant. Someone needs to go in in some capacity."

He wishes the landlord would cut him a deal on rent, at least until another big-box store came out.

"They should reach out to tenants any time an anchor leaves and give the tenant some consideration until there's an anchor to drive more business," he said. "It's a transitional period, but they stay rigid. A lot of the smaller businesses are going to be forced not to renew their leases."

Vacant big boxes can have a significant negative effect in the short term, especially with perception of a shopping center or trade area, Indiana University assistant professor of economics Micah Pollak said. 

"Not only are remaining surrounding stores likely to receive less spillover traffic, but a vacant anchor store can give the impression that a strip mall or shopping center is on the decline," he said.

"In the long term, these negative effects can be mitigated," Pollak said. "One solution is to attract a new and different big-box store. However, as brick-and-mortar storefronts continue to face greater pressure from online retail, attracting a new big-box store can be difficult. One alternative, that many strip malls and shopping centers have been successful with, is to reimagine the vacant space left behind by the big-box store."

Pollack cited the example of the move of the Menards in Schererville to a new location down Indianapolis Boulevard, and the property owner decided to carve the space up for several smaller businesses.

"Rather than fill the space with a similar big-box retail store, the space was divided up to become a Planet Fitness, a Sky Zone Trampoline Park and several other smaller businesses," Pollak said.

The nearly full Boulevard Square shopping center has continued to attract new tenants, including Salvage + and Kali Beauty as well as sit-down restaurants on an outlot.

"Besides subdividing the space, other options include converting to offices or a community center," Pollak said. "The recent and widespread closing of big-box stores across the United States creates an economic challenge for the land owners and surrounding businesses. However, it is not an insurmountable one. Thinking out of the big box may provide creative solutions."


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Business Reporter

Joseph S. Pete is a Lisagor Award-winning business reporter who covers steel, industry, unions, the ports, retail, banking and more. The Indiana University grad has been with The Times since 2013 and blogs about craft beer, culture and the military.

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