As communities across America continue to experience empty storefronts and “big-box” retail buildings, undeveloped land and half-finished building projects that failed in the recession, the challenge remains: What can be done to restore commercial real estate vitality?

Counselors of Real Estate, known for finding creative solutions to complex real estate problems, met in Miami recently, where they addressed community land and building re-use challenges during the organization’s annual convention. The best solutions: those born of exceptional creativity – something sadly lacking in many cities and towns as economic struggles continue to plague municipalities large and small.

In Miami, land adjacent to the Miami International Airport is undergoing a makeover through a project managed by Genevieve Cadwalader of Bristol Group Inc. in San Francisco. The 810,000-square-foot parcel is being reconverted to become a new cargo and office facility – and a new hanger is being developed, spacious enough (and tall enough) to house the largest of jets when indoor servicing is required. Cadwalader explained that the facility will not only improve the appearance of the area and bring jobs to the airport, but will reduce truck traffic by 22,000 trips annually over the existing scattered warehouse structures spread along lands adjacent to the airport, resulting in a significant “green” benefit to the community.

Cadwalader pointed to creative planning as an important component of the project’s success. Despite the entire cargo facility already being pre-leased to a single tenant, Bristol Group built in infrastructure reinforcements during construction, which will allow for subdivision and smaller tenants should the need for downsizing arise in the future.

Big Box Subdivisions

In fact, subdivision of large commercial buildings is just one of the options suggested when a large retail chain consolidates or fails because of financial difficulties or changes in business strategy. Empty big box stores, once thriving anchors of shopping malls throughout the U.S., are persistently hard to fill with other large retail outlets.

Some of the most creative reuses for big box stores are those that draw significant traffic to a shopping center – benefiting the other retail and service tenants – as well as the local community, said Christopher Gerlach, director of public policy research at the International Council of Shopping Centers. Examples include extensions of educational institutions such as colleges or technical schools; entertainment venues; fitness centers; medical and dental office clusters; even churches and resale shops such as Goodwill stores. Gerlach said property owners and leasing agents should consider the character of the community, as well as the adverse effect of empty storefronts – and for the benefit of all, find a creative solution to fill the space, rather than leave it empty for an extended period of time, hoping for a more lucrative tenant.

Thomas Caputo of Equity One Inc. in New York likened today’s retail real estate environment to that of the 1980s, when the catalog industry blossomed. “Catalogs started inundating people’s mailboxes back then, and some of the experts said it would be the death of the retail store,” he said. “Hindsight shows that the more catalogs were produced, the more retail sales took place at the store level — working together was the key.”

‘Omni Channel Retailing’

As retail experts, Dougal Casey of Development Metrics Consulting and I – both credentialed Counselors of Real Estate – described the retail landscape today as being in transition – poised to not only peacefully coexist with the growing Internet shopping trend but also to leverage the Internet to increase overall retail sales at the store level.

Today, “omni channel retailing” is a reality. Some retailers are currently experimenting with in-store Internet kiosks. This approach produces good results – allowing customers to touch, feel and try merchandise, but shop online for a color or size of apparel not carried in the store – or for an electronic gadget with a different screen size. Such dual-channel retailing is especially successful with a distribution model that provides same-day delivery to the customer’s home or office, or same-day pick up at the store. Even online retailers, such as Amazon.com, are now recognizing the importance of local access and the in-person shopping experience. They are opening brick-and-mortar locations utilizing the same-day delivery model for merchandise not stocked in the store.

Shakespeare In Aisle One

In some cities, creative public/private partnerships have transformed vacant buildings or storefronts into community centers, community arts collaboratives or community theaters in both city centers and suburban shopping malls.

Citing the U.S. Census Bureau’s annual retail trade survey 1999-2009 (the most recent government data available), Casey said Internet sales are growing leaps and bounds over sales at traditional retailers, with double-digit annual sales increases compared to low single-digit store sales increases. And Gerlach estimated Internet retail sales grew 15.7 per cent per year between year-end 2009 and year-end 2011, pointing out the crucial importance of creative thinking as applied to the local shopping center.

With personal savings now reported by Gerlach at 4.2 percent of income (July, 2012) – compared to the past decade’s average of 3.7 percent – there is soon likely to be significant pent-up demand, and funds to spend for goods. If so, it will be spent either online or at the store level – or it could be spent at both places.

“The retailer that survives is the exceptionally creative one – the one that can adapt to this new environment,” he said. 

Robert Michael Goman is a counselor of real estate and principal of Goman+York Property Advisors LLC in West Simsbury, Conn.