2017 saw record-breaking retail closings, and it looks like 2018 could break that record again. CoStar Group calculated that more than 90 million square feet of retail space is set to close in 2018. This number is easily on-track to pass the 2017 record of 105 million square feet.
As more and more stores close down, it’s leaving empty retail spaces across the nation. This “retail apocalypse” is hitting landlords hard and leaving them with a big question: “How do I fill these vacant spaces?”
The obvious first choice is to find new long-term retail tenants. But that’s not always an option in today’s economy. In many cases, filling your empty retail spaces requires some creative thinking.
Rent To Pop-Ups
Pop-up stores rent retail space temporarily, often for just a few months. Holiday retailers who set up in the months around Halloween or Christmas are a classic example. Another is tax-preparation companies opening for a couple months before April. New businesses might also lease space temporarily to try out a market before committing to a long-term lease.
Rent is typically lower for month-to-month agreements, but it’s often better than leaving your space empty. If you’re going to rent to temporary tenants, it’s important to have basic infrastructure in place. Pop-up shops want a space with restroom, Wi-Fi, heating/air conditioning, and lighting already in place. A neutral color scheme is also a good idea so incoming tenants can personalize things how they want.
Retail space is typically in a convenient location and has readily available parking. Those two attributes can make your vacant spaces a good choice for non-traditional tenants. Day-cares, churches, community clinics, and cultural groups might be interested in your space if they know you have something available.
Renting to clients that aren’t retailers might have an added bonus. The extra traffic can make surrounding vacant spaces more attractive to retail clients, and boost sales for retailers already in the area. There’s one case in Fort Lauderdale, FL, where a theater rented rehearsal space in an upscale shopping center. This boosted sales in surrounding stores and the new location also brought more publicity to the theater. Now, the 3-year lease is turning into a permanent arrangement.
Rethink Retail Space
A long-term solution to vacant retail space could involve changing how you present the retail space. If you had a large store move out, it might be easier to rent if you sub-divide it and market the new spaces to small businesses. And if you’re responsible for a larger retail complex with multiple vacant stores, shifting your marketing focus might help. Some former shopping centers in Seattle, New York, and Denver are finding success with food-themed malls. Other locations are shifting to mixed-use and renting our former retail stores as office space.
If you found this article useful, then you’ll probably like my book, City on a Hill. It gives a no-nonsense take on economic development. Click here to check it out. And if you’re looking for expert advice on how to market your vacant retail spaces, get in touch with us. We’ll be happy to help out.