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  • Steve Niggeman, Metro Commercial

Empty department stores become popular destinations

Sears. Macy’s. JC Penney. These iconic department stores have played a big part in American culture. (Think Macy’s Thanksgiving Day Parade.) Unfortunately for the retailers, the digital revolution has not been kind, and many are closing locations just to stay afloat. All of which leaves big empty spaces in malls and towns across the country.

Landlords and property owners are resourceful, and they’ve found businesses ready to rush in and fill the space that retailers have left behind. One popular reuse is the fitness category. Chains like The Edge Fitness Clubs and Life Time Fitness are finding that department store locations are optimal for accessibility, foot traffic and plenty of free parking. In the case of Life Time, 75K to even 140K s/f of space lets them create a high-end fitness experience, complete with free weights, cardio equipment, classes, spa services and a café serving healthy food. Metro guided Life Time Fitness to the former Macy’s at Suburban Square in Ardmore, an area whose affluent residents are just the clientele that Life Time wants. The new multi-level facility will be near successful retailers like Apple, and services like Drybar.

The Edge, a more affordable option, takes up a smaller footprint of 35K s/f but still fits in goodies like a smoothie bar and childcare. With an empty department store coming in at approximately 200K s/f, an Edge location can be one of four to six businesses to retrofit and occupy the structure.

Also willing to reuse a portion of large retail space is The Cliffs Climbing + Fitness. The Cliffs creates indoor “bouldering facilities” of 15K s/f or more; their business model is another example of the boutique fitness trend popular with the millennials.

We’ve written before that the large cohort known as millennials values experiences over things. They are huge drivers of what’s happening in commercial real estate today, and spend discretionary income on fitness, dining out and activities with friends. It’s no surprise then that “eater-tainment,” a recently coined term, is another category that’s moving in when traditional retail moves out. The Dave & Buster’s chain has benefited from this trend and has taken 48K s/f in a former Sears at Willowbrook Mall in Wayne, NJ. With all that space there’s room for 165 arcade games, billiards, dining room and a large sports bar surrounded by flat screens. There’s even a boardroom that can be rented for corporate meetings.

That being said, there is still always room for retail. Companies such as TJX, owner of Marshall’s, HomeGoods and TJ Maxx have been attracted to the vacated spaces rather than building new. Using up to 60K s/f of a former department store, TJX can combine two of its concepts to create a discount shopping destination. When you do it right and wrap together fitness, dining, entertainment and shopping, you build a real synergy—and create a destination that appeals to many people for many different reasons. Before you know it that big, empty department store is a popular destination.

Steve Niggeman is executive vice president of brokerage services and principal in the firm Metro Commercial.

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