Does De-Boxing Work?

This Minneapolis Star Tribune article looks at the prospect of cutting up vacant big-box stores into multiple spaces for smaller tenants. Landlords certainly have room to get creative with the closures of Circuit City, Linens ‘n Things and others, while it seems like large-format retailers aren’t expanding like they used to.

But the prospect is also much more expensive than finding a replacement tenant, shopping center owners say.

But one CB Richard Ellis executive quoted in the article says the activity is “ever so little.” What is possibly more likely is that we will see these boxes turn into different uses altogether, such as churches.

Are you seeing big box stores get sliced up in your local market, or are the empty storefronts just remaining vacant?

8 Responses to “Does De-Boxing Work?”

  1. 1 Confused Consumer May 18, 2010 at 7:11 am

    Boxes are “back-filled” when a) a new tenant wants to enter the market b) you have a motivated landlord (or seller) c) the terms of the lease arent cost prohibitive. Splitting utilities, building walls, installing plumbing, etc can be very costly, but if you buy it “right” and have tenants that are willing to meet your terms, it can be done.

  2. 2 Mark May 18, 2010 at 7:15 am

    I think it works in markets with a limited supply of shop space, particularly well located urban properties. In my opinion, suburban power centers should wait out the storm and avoid the redevelopment costs.

  3. 3 Derrich May 18, 2010 at 8:13 am

    In our market, they’re becoming churches, and are being filled with kids’ bouncy castles.

  4. 4 Joe Rivera May 18, 2010 at 8:19 am


    First of all, I want to thank you for the stories that you write about real estate. Keep writing them! The best thing, TODAY, for a Big Box, is a whole Flea Market. It is happening more and more all over the place, because “it’s the sign of the times”. Years ago in Pompano Beach, Fl, a failed MALL was used by car dealers on the weekends. Along came “Festival Flea Market Mall”, and it was an instant success. It is still there and doing well. Depending on where the Big Box is located, I believe it would be an excellent income producer for the owner. Continued success to you Ian!

  5. 5 greg May 18, 2010 at 9:08 am

    A smart landlord will be aggressively pursuing the limited retail opportunities in many markets where available vacant competitive space is plentiful, the majority of national and regional retail chains have been built out and the landlord can’t identify several possible users who would locate in their space sometime in the forseeable future. If that means the boxes have to be redesigned or razed, that’s what it will take if you want to keep the center’s value.

  6. 6 James May 18, 2010 at 9:34 am

    De-Boxing doesn’t work. Lets put an end to the state of denial we are in, De-Boxing just doesn’t work. The alternative users such as churches that are typically available usually add nothing to the shopping center, and more often, they diminish the value of the property. Temporary users like discounted books and so forth are even worse for the center. The roughly square shape of most boxes defies any reasonable or efficient demising of the space.
    Give it up folks, either sit on the empty boxes until a viable tenant comes along, or admit that the only effective method of deboxing involves the use of a D-9 bull dozer!

  7. 7 Vincent Vastola May 18, 2010 at 11:09 am

    I agree with James, de-boxing doesn’t work. The alternative uses/users add very little if anything to the retail corridor. Alternative uses usually negatively impact the remaining viable retail and drive property values down……best to demo the box and make the site available for development of new retail.

  8. 8 Steve May 18, 2010 at 3:03 pm

    I think, like every other type of real estate deal you look at the size of the market, location of the real estate asset and available pool of users before you decide if the property is worth acquiring. a few years ago we bought a shopping center with a old K-Mart that was being used as a flea market and very successfully sub-divided the building and leased it to three national tenants. I agree that if you want to preserve value, churches, bazaar’s, flea markets, mini storage units, offcie users, etc are probably not a solution unless you own a property that is in an area that ins’t generating retail interest.

    I have seen many properties over the years lose their main anchor tenants who relocate to a more vibrant part of a town and there are no altenratives but the churches, flea markets, etc. I belive that if the real estate is good and you own it or buy it right that retenanting with a single user or multiple users are both viable options.

    The reality is that until unemployment comes down, cosumers start shopping again and Washington gets out of peoples business retial expansion is probably going to be slow. I hope these things happen sooner than later.

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May 2010

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