From Vacant to Vibrant: Communities Find New Uses for “Big Boxes”

March 31, 2006

This Save-A-Lot grocery store at 1804 Dixie Hwy. (18th Street) in Louisville, occupies what was once a vacant "big box." (Photo by John Nation)

Fast-food chains originated the concept of "super-sized"; however, big-box retailers have taken the term to a whole new level. Today, big-box retailers such as Wal-Mart, Target and Kmart have embraced the trend of bigger is better and continue to develop mega stores that offer the convenience of shopping for a wide range of consumer goods-from groceries to linens and anything in between that a household might use

The trend of building new super stores has left a trail of vacant big boxes scattered throughout cities and towns. Rural, urban and suburban communities are all struggling with the reuse of vacant, large retail space.

Julia Christensen, an artist and native of Bardstown, Ky., drove nearly 20,000 miles across the country to learn how communities are reusing these buildings. She discovered that these empty stores have been transformed into a variety of uses-museums, hospitals, churches, restaurants, car dealerships and schools.

The buildings are appealing to businesses, churches and organizations because they are strategically located, with improved roads and plenty of parking, Christensen says. Location is the number one factor, as in any real estate transaction, that increases the appeal of these empty retail spaces, and reusing space presents a more affordable option than building. Even so, the amount of space to be redeveloped can be a costly challenge, and the buyer will plan to develop the space in phases as opposed to all-at-once costs.

In Austin, Minn., an empty Kmart sat vacant for several years, which caused further abandonment of other surrounding small businesses, Christensen says. Today, more than 100,000 visitors come annually to tour what is now the Spam Museum and to learn more about the history of the canned meat. The transformation of the empty Kmart into the Spam Museum has also helped revitalize the surrounding commercial district, Christensen says.

Mt. Sterling, Ky., transformed an old Wal-Mart into a comprehensive medical center.

In Arlington, Texas, the public school system has purchased several Food Lion stores that went under with the idea to transform them into schools.

Christensen, currently teaching at Stanford University and the California College of the Arts, became interested in big-box reuse when her hometown Wal-Mart moved in 1991 to a bigger store on the other side of Bardstown. Nelson County, where the original store was located, eventually bought the property, razed the Wal-Mart and built a courthouse on the land. Since then, Wal-Mart has moved again to a Super Wal-Mart outside of town. A group of investors purchased the second Wal-Mart and currently rents it to Peebles Department Store, which opened last November.

Big-box retailers tend not to locate in large urban markets such as Los Angeles, New York City or Chicago due to space limitations for free-standing buildings and parking lots, Christensen says. However, medium-size cities such as Louisville, and rural and suburban communities are markets that have seen a proliferation of big-box retailers relocate to super-sized stores.

Louisville Mayor Jerry Abramson created a strategic approach to retail development after conducting neighborhood meetings with constituents, landowners, small business owners, developers and attorneys during the 2003 mayoral campaign.

As a result, the city established the Retail Development Division to facilitate the development of retail businesses along Louisville's Metro commercial corridors.

Its goal is to identify under-utilized or vacant space and convert those areas into vibrant neighborhood assets through the Corridors of Opportunity in Louisville (COOL) program. It also assists business associations in Louisville with startup and expansion issues, which can bring improvements and new businesses to commercial areas.

The program helps targeted neighborhoods expand retail opportunities such as groceries, restaurants, dry cleaners and hardware stores. "These types of retail services are among the core services that improve the quality of life in any neighborhood, providing convenient access to daily necessities," Abramson says.

Retail staff use their knowledge of the Louisville market to identify retail development sites, recruit retail services and developers, provide demographic and other information for site selection, facilitate the approval process and introduce financial and infrastructure incentives like gap financing, facade loans, retail forgivable loans and public improvements (streetscape, landscaping).

The Retail Development Division's main focus is underserved neighborhoods in low- to moderate-income areas where residents feel they do not have enough retail services and restaurants, says John Fischer, assistant director.

In its first three years, the COOL program has facilitated more than 150 projects. Successful examples include the redevelopment of Bashford Manor Mall from an empty enclosed mall to a "power center" (a walkable collection of big-box stores) and identification of a site for a new Wick's Pizza, an independently owned retailer, in southwest Jefferson County. By the end of 2006, the new location's addition will help double the company's annual revenue.

The Retail Development Division also provided a forgivable loan and a facade loan to investors in two Save-A-Lot stores that opened in underserved Louisville neighborhoods.

In April 2004, Steve Kute and his partners opened a Save-A-Lot on 18th Street in a vacant big-box store that became unstable when Kroger moved out several years ago. The city provided a facade loan and funding for concrete and curb work.

The community has welcomed the new grocery store, and the store's performance has been outstanding, Kute says.

The second Save-A-Lot opened in 2005 in Hazelwood Shopping Center, a strip center that received a complete overhaul. The city provided a $100,000 forgivable loan for business assets. Neighborhood residents, especially the elderly, have responded favorably to the new stores, Kute says.

The Retail Development Division's role in guiding businesses to empty big-box space is a pivotal one in providing retail services to underserved neighborhoods. Fischer captured the essence of this division when he said, "The most obvious location is not always the most lucrative."

About the Author
Woman with dark hair in business attire
Faith Weekly

Faith Weekly is a community development advisor for the St. Louis Fed's Louisville Zone. Read more about Faith's work.

Woman with dark hair in business attire
Faith Weekly

Faith Weekly is a community development advisor for the St. Louis Fed's Louisville Zone. Read more about Faith's work.

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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