Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
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INVESTMENT Retail Revival A new strategy breathes life into zombie centers. w by Jim Conway Wikipedia lists about 200 regional grocery chains in the U.S., comprising thousands of stores. Each one is in a constant battle for survival. Competition plus consolidation means that even strong chains are forced to close marginalized stores with unprecedented frequency. In the next few years, hundreds of empty grocery stores may be added to the growing inventory of vacant big-box space. Often, empty grocery big boxes are in aging class C strip centers that relied on the grocery store as the anchor to bring in trafc for smaller tenants. Frequently, the loss of the anchor results in the eventual loss of some of the smaller tenants, or even triggers a "go dark" provision, exacerbating the problem. Te Wall Street Journal dubbed the resulting, mostly vacant, buildings "zombie properties." that grew stronger during the recent recession. According the U.S. Census Bureau's Monthly Retail Trade Survey, used merchandise sales grew 21.2 percent from 2008 to 2012, while total non-auto retail sales dropped 7.1 percent. Tere are about 3,500 antique malls in the U.S., up about 8 percent from last year, according to Mike Becker, vice president of the Antiques & Collectibles National Association of Davidson, N.C. Antique malls range in size from as little as a few thousand square feet up to the 80,000-sf Peddler's Mall near Louisville, Ky. Antique mall operators and owners sublease shops or booths to dealers who sell collectible and antique merchandise. Te antique mall provides the sales checkout service and delivers the proceeds to the dealer afer deducting the monthly shop rent. Te operator also advertises; stafs the shop; collects sales tax and pays it to the state; provides utilities; and maintains the mall and all other services necessary to run a retail business. Most are open seven days a week. Dealers provide, display, price, and tag their merchandise; some visit less than once a month. Most dealers don't make a lot of money. Teir shops are ofen more hobbies than businesses intended to make a proft. Renting a shop space costs a little more than renting a storage facility and ofers social value and a way to sell their treasures so they can make room and money to buy more. A Retail Solution Managers and owners of zombie centers ofen have only a few choices: Find a replacement tenant (a disappearing commodity), sell the property at a substantial discount to another investor, or lease it to a secondary, less proftable user such as Goodwill, local governments, or a church. But another option is to open a specifc type of store in the vacant grocery space: an antique mall. Antique malls are part of a $13 billion used-merchandise industry 16 July | August | 2013 Commercial Investment Real Estate Eric R. Hinson/Getty Images ANALYSIS