Big boxes are crumbling around us

[Conan71]

Don't forget to raise residential property assessed values.    As someone that lives very close to Promenade mall, I'd like to know why I just got a notice that my home's assessed value went up 13%.   Apparently abandoned/derelict malls are a raise property values.  Who knew.   (you know you're an adult when you're going to to visit city hall to contest your property value)

FWIW, both the houses I own a couple of miles north of you along the Yale corridor were re-assessed as well this year.

[AquaMan]

Mine went up as well. IIRC about 20%. Fortunately it is held to a smaller percentage because of my age. I wonder if the plan is to raise these properties ad valorem now because they are age limited in the belief that when the boomers cash in or pass on that they automatically jump to the most recent appraised tax value regardless of what derelict boxes may be nearby. Actually, pretty smart.

[Red Arrow]

(you know you're an adult when you're going to to visit city hall to contest your property value)

Check the property map:
http://www.assessor.tulsacounty.org/assessor-maps-agree.php?type=interactive

If your $ per square ft assessment is similar to your neighbors', don't waste your time.

[BKDotCom]

Add Gordman's to the list

[TulsaGoldenHurriCAN]

Creative ways Tulsa could repurpose its vacant storefronts


Tulsa stands to have at least three more vacant storefronts following the bankruptcy filings of Radio Shack's parent company and Gordmans, the regional discount department store.

That empty retail space will join the soon-to-be vacant Macy's and Sears in midtown Tulsa. And we don't even know if the metro area will be affected by the coming J.C. Penney closures yet. A few weeks ago, I wrote about what the closures do for the retail centers where the leaving tenants reside and how that spills over into the broader picture.
Today, when I saw that Gordmans was going to leave Centennial Plaza with another empty storefront, it got me thinking about a pair of recent interviews I had. In both, the conversation turned to what would happen to the spaces after the current tenants left.


Dan Houston of the consulting firm Civic Economics said one issue that municipalities will soon be grappling with once their struggle to collect sales tax from online retailers was over, would be land use.


He noted that as online sales become more convenient and gain market share, there isn't the need for as much retail space.


"There will be less commercial space relative to our population in the future than there is today," Houston said. "And Amazon, and online retail, obviously played an enormous role in that. That's going to have tremendous repercussions for tax revenue."


The other interview was with a local real estate broker. We talked about how the sheer size of an anchor tenant made it tough to replace one and that landlords were forced to get creative with the large square footage, either re-purposing it or making the space suitable for more than one tenant.


If one tenant doesn't work, a grocery store might. A Washington Post story last week noted that, across the country, grocery stores are filling some of those large vacant spaces and changing the mall in the process.


"Part of it is a survival tactic," Calvin Schnure, an economist with the National Association of Real Estate Investment Trusts, told the Post. "E-commerce is changing people's spending patterns. But in the process, they are changing the shopping experience in a mall."


While the fate of soon-to-be empty storefronts is a question of what will happen in the future, a possible answer could be in Tulsa's past. The former Eastland Mall is now Eastgate Metroplex — a call center hotbed — and, on the outskirts of what people are willing to call midtown Tulsa, there's the old Fontana Shopping Center. It used to have a Ross Dress for Less, a movie theater and what my boss describes as an "awesome" record store.


Now, Common Ground Church occupies the largest amount of space. There are two gyms, a Hideaway Pizza location, a sporting goods store, an events center and a billiards hall.


And, interestingly enough, some old retail space has become a place from which loose-limbed teenagers emerge clutching baseball bats on weeknights.


We don't know what will become of Tulsa's closing stores. But, maybe, like it did when I heard the thwack of aluminum meeting a baseball and something white flicker in my peripheral vision when I walked by one night, the answer could surprise us.

http://www.tulsaworld.com/blogs/business/samuelhardiman/biz-beat-creative-ways-tulsa-could-repurpose-its-vacant-storefronts/article_5317eebb-11df-5673-9b5f-0c4496b00149.html

[saintnicster]

Don't forget to raise residential property assessed values.    As someone that lives very close to Promenade mall, I'd like to know why I just got a notice that my home's assessed value went up 13%.   Apparently abandoned/derelict malls are a raise property values.  Who knew.   (you know you're an adult when you're going to to visit city hall to contest your property value)

when was the last time your house had been assessed?  Mine went up (21st and yale), but I assumed that was because it was still showing a cost from 2007 when the previous owner bought the house

[TulsaGoldenHurriCAN]

TW has noticed. This is a great and puzzling question. It is yet another reason why Tulsa should not give sweet deals to developers promising new retail. We have plenty of existing retail that is vacant or will be vacant soon with no end to the decline in sight.

What would make sense to me is for big online companies like Amazon to create "facilitation centers" where you can go try the top-rated best-selling items and place your order (or for a bit more markup, buy one there to take home or have delivered that day). They key difference being facilitation centers wouldn't necessarily carry any stock and are designed as showrooms first and only selling items they can restock from a warehouse quickly (Just-in-time delivery).

Indoor sports practice/training areas seems reasonable (golf/baseball/go-carts). There's a mutli-sports arena complex going in near Southern Hills. Maybe that's a new model of things to come.

Indoor dog parks? Maybe dog clubs for those too snobby to use a public dog park and who want an indoor year-round place for dogs to go socialize and play off-leash (outdoor dog park clubs already exist - e.g. Dallas).

In the future, maybe an advanced Virtual Reality setup. Basically, a place that has high-end VR and all sensor equipment needed to facilitate a great unique VR experience so the average person can go try it from time to time without having to buy expensive equipment with limited media/games that may or may not be obsolete within a year or so.

UAV/Quad-Copter/Drone race courses - What we see so far might be just the tip of the iceberg in terms of popularity for these in the future. Imagine a place where you can go to race these and if something breaks, be able to get it fixed or buy parts there. Niche hobby places often struggle but they could diversify by having remote control race cars tracks, remote boat race areas and even a robot battle ring. Would be a place for both hobbyists and spectators.

Split the areas up into tiny retail booths. Yes this has the potential to be bad/cheap-looking but also could be really neat if done well. The Antique Mall in the old farmers market building west of downtown OKC is a good example but the starting building was a great historical building to begin with - not a JC Penny or Gordmans.

Retail stores probably need to focus on becoming more of an experience and offer incentives and other things you can only get in-store or else many more will eventually be replaced by online shopping.

Breweries/brewpubs - Micro-Breweries require light-industrial zoning, but perhaps more brewpubs/breweries could get zoning approvals and fill some of the space as they are set to really take off with new laws.

Converting to share-workspaces like 36 Degrees North in the Brady Arts District

[dbacksfan 2.0]

Neiman Marcus considers sale to Hudson's Bay.......

Neiman Marcus Group Ltd., the struggling department-store chain that scrapped plans in January for an initial public offering, is considering a sale of the company instead.

Neiman Marcus is in talks with Hudson's Bay Co., the owner of Saks Fifth Avenue, about a buyout of the upscale retailer, according to the Wall Street Journal. The deal would exclude Neiman Marcus's nearly $5 billion in debt, the newspaper reported.

The takeover speculation follows Neiman Marcus's announcement Tuesday that it's working with financial advisers on a review of its strategic options, which may include selling part or all of its business. The company also wrote down its brand and other assets by $153.8 million last quarter and rejiggered its corporate structure to give it more financial flexibility.

https://www.bloomberg.com/news/articles/2017-03-14/neiman-marcus-is-considering-a-sale-of-company-following-slump

[TulsaGoldenHurriCAN]

Ultimately, the demand for commercial space is going to plummet. No matter what crazy/inventive ideas people come up with, there will be many millions more square feet of commercial space available in the Tulsa area in the coming years and no one to fill them (Old Borders is STILL empty 6 years later). So commercial-zoned properties and commercial rental rates should plummet (not that it will, especially in the newer hot-spots like Southern Hills. In fact, the places still lively and busy should go up).

Look around at all of the empty restaurant and retail space all over: Even in areas viewed as hot spots like Downtown and Cherry Street, there are lots of vacancies. Some places were never even occupied like the shopping center with Bed Bath & Beyond off I44. If you drive around any part of Tulsa (especially North, East or West), you see perhaps more vacant commercial space than occupied spaces. In those areas, land-owners had a few choices: Keep lowering rent to compete with an ever-declining pool of worsening/riskier candidates, sell the property at a loss, or keep it and hope the area turns around later on. That third approach could work if you aren't dependent on the rental income and don't mind the taxes (which don't really drop as fast as your property value does) and could pay off if the area ever becomes "quaint" or gets bought to be developed, but in the majority of cases, it doesn't get better and the "nice" parts of town keep moving further out where the cheap land is. Value declines until you can hardly give the property away. Virtually every retail center/strip or "hot spot" from more than 20 years ago is now a dump (Admiral strip, 61st & Memorial,  71st & Memorial is getting redone partly but looks dumpy now). A few have been re-purposed (Eastland Mall, though area is still a dump). Many more have a pretty high vacancy rate.

I can see larger commercial property owners getting their land rezoned to multi-family residential and flooding the market with cheap apartments/condos, even if retrofitting some of these is expensive. Hotels would make sense also. Whatever happens, the big corporations which own most of this property (and probably already made enough profit from these short-lived shopping centers to be ahead) will likely come out ahead anyway (They'll have the resources to compete for fewer tenants and retrofit as needed). Smaller businesses with too much invested in commercial properties will suffer. Homeowners in those areas could be hurt as an influx of either vacant space or apartments lowers land values.

Lets hope people and the economy can adjust to this and create something to replace big box retail. Of course this board is full of people who are for smart development for many of these exact reasons which make these big-box stores such bad development choices. Tulsa won't be the only place to suffer from this and perhaps Tulsa will be better off than a lot of places which might have a lot more invested in retail and malls, but decades of poor commercial retail development prove that Tulsa has not set itself up well for the future either. Furthermore, this could end up hindering good future developments such as Santa Fe Square and the others downtown which have seemed to stall. If retail demand plummets, it's hard to build hundreds of thousands of square feet of premium retail. Sure you could make it office space, but that's not an easy swap.

[johrasephoenix]

I find it fascinating how dense urban retail centers declined as mid-century preferences shifted towards bigger and bigger store footprints to hold enormous amounts of inventory with more and more parking.  It's what killed historic retail centers like downtown and Kendall-Whittier and every small town Main Street. 

Now preferences are shifting back to what they were pre-1950 - lots of little shops with small footprints.  Places where those old storefronts survived 50 years of neglect, like the Chicago North Side, Cherry Street, etc are booming.  I bet if you could go to any small Oklahoma town and teleport its Main Street to downtown Tulsa the place would be gangbusters successful.  I love Main Street by Prairie and Hunt Club and that is literally the one block of classic main street that survived in downtown.  You can only imagine how awesome it would be if Main Street still stretched unbroken all the way to the Sinclair Building.

[johrasephoenix]

I also think that small footprint, experiential retail is alive and well.  Unique restaurants, sweet patio bars, services, anything that can't be replicated online.  Those things thrive in walkable areas and fail in shopping centers.

I honestly have no idea what to do about our legacy of huge shopping centers that have no real use anymore.  Tear them down and make housing?  In any case we should be discouraging the nasty habit of building more of them at the extreme edge of the city. 

[Conan71]

Ultimately, the demand for commercial space is going to plummet. No matter what crazy/inventive ideas people come up with, there will be many millions more square feet of commercial space available in the Tulsa area in the coming years and no one to fill them (Old Borders is STILL empty 6 years later). So commercial-zoned properties and commercial rental rates should plummet (not that it will, especially in the newer hot-spots like Southern Hills. In fact, the places still lively and busy should go up).

Look around at all of the empty restaurant and retail space all over: Even in areas viewed as hot spots like Downtown and Cherry Street, there are lots of vacancies. Some places were never even occupied like the shopping center with Bed Bath & Beyond off I44. If you drive around any part of Tulsa (especially North, East or West), you see perhaps more vacant commercial space than occupied spaces. In those areas, land-owners had a few choices: Keep lowering rent to compete with an ever-declining pool of worsening/riskier candidates, sell the property at a loss, or keep it and hope the area turns around later on. That third approach could work if you aren't dependent on the rental income and don't mind the taxes (which don't really drop as fast as your property value does) and could pay off if the area ever becomes "quaint" or gets bought to be developed, but in the majority of cases, it doesn't get better and the "nice" parts of town keep moving further out where the cheap land is. Value declines until you can hardly give the property away. Virtually every retail center/strip or "hot spot" from more than 20 years ago is now a dump (Admiral strip, 61st & Memorial,  71st & Memorial is getting redone partly but looks dumpy now). A few have been re-purposed (Eastland Mall, though area is still a dump). Many more have a pretty high vacancy rate.

I can see larger commercial property owners getting their land rezoned to multi-family residential and flooding the market with cheap apartments/condos, even if retrofitting some of these is expensive. Hotels would make sense also. Whatever happens, the big corporations which own most of this property (and probably already made enough profit from these short-lived shopping centers to be ahead) will likely come out ahead anyway (They'll have the resources to compete for fewer tenants and retrofit as needed). Smaller businesses with too much invested in commercial properties will suffer. Homeowners in those areas could be hurt as an influx of either vacant space or apartments lowers land values.

Lets hope people and the economy can adjust to this and create something to replace big box retail. Of course this board is full of people who are for smart development for many of these exact reasons which make these big-box stores such bad development choices. Tulsa won't be the only place to suffer from this and perhaps Tulsa will be better off than a lot of places which might have a lot more invested in retail and malls, but decades of poor commercial retail development prove that Tulsa has not set itself up well for the future either. Furthermore, this could end up hindering good future developments such as Santa Fe Square and the others downtown which have seemed to stall. If retail demand plummets, it's hard to build hundreds of thousands of square feet of premium retail. Sure you could make it office space, but that's not an easy swap.

Great points and great insight.

There's always going to be need for terrestrial retail, it will never completely disappear.  Home improvement stores will always have a local demand as no one is likely to mail order building materials or spring plants and many times I find myself there out of a sudden necessity or an impulse whim of another project I want to tackle.

Electronics stores like Best Buy seem to be doing quite well even with tons of online competition.  That might be because some of us are just not technically savvy and like having someone to ask questions before pulling the trigger or the simple fact your TV took a dump and you don't want to wait a day or two for the new one to show up.

Penney's and Sears are dated models and really did not offer much of interest to myself or my wife, nor many others it would appear.  I'm surprised Sears held out as long as it did as there was seldom more than 30-40 cars in their parking lot.  I didn't go there for lawn equipment and I'd long since stocked my tool supply with Craftsman tools.  I might buy the occasional tool gift there but that was it.  They weren't competitive on electronics or appliances.  Their clothing prices even on "store closing" mark down aren't competitive.

Locally branded retail will always do well if they have an innovative inventory, a niche which is not well filled elsewhere, or simply great ownership/management people find hard to resist.  I'm not certain if it's national level retail Santa Fe Square is planning to attract or locally-based, has anyone else heard?  I'd think a good mix of both would do well by downtowners.  It would be wonderful if an Apple Store would open downtown.

Along the lines of big box, I noticed the turnpike improvements at Elm in Jenks appear done or very near, yet there's no dirt turning for the proposed Simon Outlet Mall.  I honestly don't see this happenening and Simon apparently isn't really forthcoming with new information on starting or completing construction.

[DTowner]

I think the statements that big box retail is dying or collapsing are overstated (the large department store model may very well be on the way out).  The real issue is there is simply way too much retail space.  Not only are online sales eating into brick and mortar businesses, but there has been way too much brick and mortar built over the last decade.

Think of the major retail areas that have sprung up in Tulsa in the last decade: Owasso along 169, Broken Arrow east of Bass Pro, Memorial from South Tulsa into Bixby, and Tulsa Hills/Walk.   A decade ago, big box retail in those locations simply did not exist and folks in those areas traveled to Woodland Hills/71s & Memorial, 41st & Yale and 21st & Yale to do a much of their shopping.  Now, each of those areas essentially has all the same types of stores/restaurants and everyone stays closer to home.  In that same decade, Tulsa area's population growth hasn't come close to matching the growth in retail square footage. 

Often using debt to fund continuous expansion plans to hit growth numbers to please shareholders or equity fund owners, big box brands just kept building and building as new "life style" centers voraciously ate up land.  As the saying goes, something that can't go on forever won't.  That kind of expansion cannot continue to exceed population/consumer growth, and highly leveraged balance sheets can't survive many bad management decisions or an economic downturn.  While the national economy grew slowly for most of the last decade, Tulsa's economy took a dive with oil prices the past 2 years. 

Slow population growth, declining economy and an oversupply of retail store fronts.  Perhaps the only surprise is there aren't more empty stores in Tulsa.

[Breadburner]

Amazon and others be killin their biz....

[TheArtist]

With the tepid population growth in Tulsa (if there even is any growth) the new shopping centers and such that we have are basically just thinning out the customer base or drawing it to a new area leaving the older areas to suffer.  Add to that internet purchasing eating up a percentage. 

What I worry about of course is downtown.  I am still frustrated that I was beaten down over the zoning thing that could have perhaps gotten us a step towards having a retail corridor.  In order for retail to survive downtown it will need to be a part of the "experience" thing.  We will need to have a concentration of retail/restaurant somewhere downtown to make it a lively and interesting destination area.  That liveliness will be the the attraction and "experience" that will draw people to the retail.  Otherwise, having a couple shops here, a few there, etc. will result in weak, struggling retail.  I for one am trying to do three things at once.  Keep interesting fun products in the store at a good price while also now trying to add fun "experience" type components into the store, and also going up one more dimension by adding "stories" and characters to the products and experience components.  Got to work to stay ahead of what the other guys are doing and realizing!  Cant' wait for you to see what I have up my sleeves next!