Closed big-box stores create retail eyesore in many cities

DETROIT — For clues to what may happen to all those empty big-box stores and ailing shopping centers where people once swarmed, look to the shopping district around the Detroit suburb of Westland and its namesake mall.

When retailers such as Value City, Circuit City, Service Merchandise and Macy's at Westland Shopping Center closed, they left behind large and vacant store buildings, a type of retail space that has gotten challenging to fill amid the explosive growth of online shopping and consumers' changing shopping habits.

A few of these shuttered stores were eventually refilled with new stores. Others were transformed to house businesses that aren't retail, including turning the Circuit City into city hall. Some still sit vacant, and one big box was torn down.

While Westland has seen a particular abundance of large store closings, retail and development, experts say that suburbs across the region have become over-saturated with stores as more shopping moves online and traditional retailers downsize.

There is general agreement that southeast Michigan now has more empty big-box and midsize box stores than retail tenants to fill the space, a growing problem around the country.

"It's not only in Michigan, it's nationwide," said Ron Goldstone, senior vice president at NAI Farbman, a real estate firm based in Southfield, Mich.

Struggling retailers like Kmart, Sears and J.C. Penney — all known for big stores — have been closing dozens or even hundreds of locations a year. And there is no indication this will stop. 

"There's going to continue to be closures, without a doubt, because we're over-stored," said Frank Monaghan, president of Monaghan & Company, a commercial retail brokerage. "There are a lot of areas in the Detroit area where I don't see retail occupying these buildings ever again." 

The big empty-store problem is turning critical for a few communities such as Harper Woods, Mich., where visibly struggling Eastland Center mall has lost two former anchor stores — Macy's and Sears — and is set to lose another in February when Target closes. The mall also is a neighbor to a vacant Circuit City that has languished for years.

"The whole big-box concept is not working, as far as it pertains to malls," Harper Woods City Manager Randy Skotarczyk said.

The proliferation of empty stores has compelled owners to be inventive when trying to refill them, chopping up properties into multiple smaller storefronts and going after nontraditional tenants, such as trampoline centers, swimming schools, self-storage, medical facilities and light industrial workshops.

"You have to get creative or you're going to have a lot of empty big boxes decaying in front of your eyes, and then basically being bulldozed," Goldstone said.

The latest Eastland proposal calls for converting the mall's empty four-story Macy's into self-storage units.

"There seems to be a need in the area for storage," Skotarczyk said, "but I don't think it's going to generate a lot of excitement for other stores to move to the mall."

Farbman group's Goldstone, which regularly brokers big-box property deals, estimates that one-third of empty stores in southeast Michigan could get reused in their current retail format. That has been happening to numerous old Kmarts that Kroger has bought, renovated and transformed into new grocery stores. 

For the remaining two-thirds, he believes about 60% of them could see new life through nontraditional tenants, such as gyms or storage facilities.

Prospects aren't good for the leftovers. Some could become flea markets or bingo parlors, "or they may just sit there and eventually get torn down," Goldstone said.