Creative Uses for Retail Space Revive the Market
It would not come to you as a shock if I told you many big-box stores are dying. But the real story isn’t the demise of these stores…but rather what is replacing the businesses in these buildings. In the face of adversity, retail spaces that are becoming vacant at an overwhelming clip are being repurposed for other uses, including “medtail” and logistics.
What is “medtail”? Among other things, it’s a word that gets investors excited because of the opportunity it offers. I’ve seen first-hand in the Baton Rouge market that medical users are targeting space previously used for retail, a move which benefits both the healthcare and the retail sector. Most medical providers require a brick-and-mortar presence over the internet, and they draw steady traffic, resulting in a win-win for retail locations. As baby boomers age and the demand for healthcare grows, placing medical tenants in retail space would provide the stability investors seek for their assets.
Logistics is another avenue of opportunity for retail space as e-commerce continues to strengthen. I wrote a blog last year about the industrial sector boom due to the rise in e-commerce, but the inventory of industrial properties is limited which provides an opportunity for retail to be repurposed to meet this need. As an example, in 2019 approximately 12 million square feet of logistics space near the Dallas-Fort Worth Airport was absorbed for use as data centers, warehouses or distribution centers.
Another adaptive reuse for retail that requires a significant amount of square footage is the entertainment retail concept, like the Topgolf that opened in Baton Rouge in 2019 or the Main Event family entertainment center that is occupying 50,000 square feet in the Mall of Louisiana. Main Event is occupying the former Borders/hhgregg space and attracting steady foot traffic to surrounding stores in the Mall of Louisiana.
The markets I serve have been able to bounce back from the threat to retail through the creative repurposing of retail space. Developers and investors alike are responding positively to these opportunities and I’m dedicated to helping my clients find solid retail investments.
Justin Langlois, CCIM is a Commercial Real Estate Investment Advisor with Stirling Properties servicing Baton Rouge, Louisiana and surrounding markets. Please reach out to Justin to discuss your real estate investment strategies.