Adventures in Capitalism has two articles (and possibly more to come) on the changing face of shopping malls around the USA. They shed sobering light on the issue of debt and how it's affecting US business and commerce, as we discussed yesterday.
To whet your appetite, here's an excerpt from the second article.
In the past, retail was retail, warehouse was warehouse and office was office—the same for all other CRE [commercial real estate] classes. There was some cross-over, but the main commercial real estate components stayed segmented for the most part. Now, with big box stores, the lowest hanging fruit for online shopping to knock off, going to dodo-land, there will be hundreds of millions of feet of well-located space suddenly becoming available. People act as if there are enough Ultra Beauty and Dick’s Sporting Goods to go around. However, you cannot fill all of this space with the few big box retail concepts still expanding—especially as many stalwarts are themselves shrinking.
As a result, a huge game of musical chairs is about to take place. Why pay $20/ft for mid-rise office space, if you can now move into an abandoned Sports Authority for $5/ft. Sure, it doesn’t come with windows, but employees like open plan space and there’s plenty of parking. Besides, with the rental savings, you can offer your staff an in-house fitness facility and cafeteria for free. Does your mega-church need a larger space? There’s probably a former Sears or Kmart that perfectly accommodates you at $3/ft. Have an assisted living facility with an expiring lease? Why not move it to an abandoned JC Penney—the geriatrics will feel right at home, as they’re the only ones still shopping there.
Go onto any real estate website and you will find out that huge plan space is nearly free. No one knows what the hell to do with it and the waves of bankruptcy in big box are just starting. As online evolves, these waves will engulf other segments of retail as well.
There's more at the link, and also in the first article in the series. Recommended reading.
Actually, everyone at my wife's place of business hates their "open space plan" with a passion. There's no privacy and it's hard to hold a phone conversation when another phone conversation (often a loud one) is being held three feet away from you. My wife especially hates that people walk up behind her, pause, and decide to have their conversations (some business-related, some not) right behind her instead of in their own damn offices.
One of my daughters works in an "open plan" space and she hates it.
I work in an open desk environment and it isn't bad. We're programmers, we don't talk on the phone, and almost all of us wear our headphones for music. The office also has a set of "white noise" generators installed, so you can't make out conversations more than ten feet away or so.
And, as an adjunct to nearly free space, there's one heck of a business opportunity for a company to manufacture modular, rapid-assembly free standing offices - panelized off-site construction.
Need office space? Bolt together some standardized wall panels; each panel is pre-wired for electricity, telephone and network, one panel has a door installed, a "roof panel" bolts to the top. The two-sided panel that composes the east side wall of office 1 is also the west wall of office 2.
Biz architects should be able to design attractive and simple "office clusters" in their sleep, carpenters should be able to build hundreds of them a week, getting electricity to them might take several days (big box stores, or regular mall space, don't have electrical and network outlets everywhere, which is why we have wi-fi). Mall management, assuming they aren't suffering from terminal cranial-anal inversion syndrome, should be able to expedite the necessary facilities upgrade work, permits, etc.
Rocket surgery it ain't.
In Colorado there's a different problem. All large spaces are being bid up by marijuana growers to the point that a legitimate manufacturing operation can't find space at reasonable rates.
I've seen a couple news articles where old Walmarts have been repurposed as libraries or community/government centers. Folks will take advantage of bargain-basement real estate.
"As a result, a huge game of musical chairs is about to take place. Why pay $20/ft for mid-rise office space, if you can now move into an abandoned Sports Authority for $5/ft."
Ford moved a large part of their corporate purchasing department into the vacant Lord & Taylor space at FairLane Mall. (All while spending $1 billion on renovating or building new office space. One reason Mark Fields got canned. Who owns the real estate being built, well that's another story.) BTW Tim above is right about the open space plan, it's atrocious and its value got debunked years ago but is still in vogue with the SJW HR crowd.
The nearest "large" town to me, a little over 40 miles away with a population of around 10,000, has two former large retail spaces that were bought by churches. One was an old Wal-Mart and the other a regional Target-like store. They were two of the largest retail spaces in town and I imagine the city hated to see it since it took a good chunk of properly tax revenue off the tax rolls. I know of similar retail buildings in other places that were turned into warehouse, storage and shipping facilities. Instead of companies building or staffing their own warehouse or shipping department they could contract that out to someone else.
What happens to those of us who can't afford SmartPhones, or who reside in a "secure" apartment building where one also needs a key to enter the building itself?
What about the security issues surrounding online transactions?
Will some have to take a week off work, or reschedule appointments, so as to meet up with the FedEx or UPS deliverer when they arrive, every time they order a new pair of shoes or winter coat or jeans?
And just how punctual are the FedEx and UPS employees?
Not all of us are going to handle the transition from "big-box" to "online only" very gracefully.
In urban areas of Colorado, warehouse space rents at a premium, if you can find it at all. Three guesses why, and the first two don't count. Some dead malls might go that way too -- or be converted into condominiums and "lofts."
All real estate, as they say, is local.
Sure, it doesn’t come with windows, but employees like open plan space and there’s plenty of parking.
@Tim beat me to it -
Employers like open plan space, people who have to work in it mostly hate it.
On the upside, former malls and big box stores are usually closer to fast food joints than space in an office/industrial park.
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