Walmarts To Close, Can This Help With Housing?

Posted on by TMN Editor

By PATRICK LAVERY

As the retail giant Walmart makes news with their plans to close underperforming locations, urban designers see an opportunity to discuss repurposing retail properties.

A recent Nexstar Media wire report confirmed that despite a strong holiday shopping season to end 2022, Walmart was preparing to close seven stores in three states – including three in Illinois, all in the Chicagoland vicinity.

The big box giant referred to these locations, also in Arkansas, Florida, New Mexico, and Wisconsin, as “underperforming.” One of them, in Lincolnwood, Ill., was a pickup and delivery-only store that opened in 2019.

While that kind of model made sense during the retail restrictions of the Covid pandemic, it seems to be one that Walmart is now abandoning, according to the Nexstar report.

Jason Beske, senior urban designer and principal for Stantec’s Urban Places, doesn’t think it’s all that surprising.

Beske told The Mortgage Note that Covid rendered consumers complacent.

“Instead of driving to a Walmart that may take me a few hours to pick up one item, why not go to Amazon Prime and get something either the same day or the next day and save myself the time? You know, what’s our time worth?” Beske said.

Beske’s work is focused on the development of walkable, urban retail, which he said Americans now desire in abundance and which Walmart, in most cases, cannot provide.

“People want to be able to access, on foot, some of these retail amenities,” he said. “So it’s not so much I’m going to drive out to the edge of town to go to a Super Walmart anymore. I would like the convenience of the amenities within a five-minute walk of where I am.”

Around the turn of the millennium, Beske said local governments across the United States were asking developers to include retail in their plans for new building at such a rate that the country eventually became overdeveloped in retail, to the point that dozens of acres on the outskirts, reserved for shopping, are now seen as a “negative aspect” of towns’ portfolios.

All told, the seven announced Walmart closures comprise just a smidgen of the 782 million square feet the company’s properties occupied in the U.S. as of Jan. 31, according to corporate data.

That breaks down to 3,572 Walmart Supercenters, 682 “Neighborhood Markets,” 364 Walmart Discount Stores, and 99 small-format stores, in addition to 600 Sam’s Club locations.

So, in short, the behemoth superstore isn’t going anywhere.

But in examining that square footage from the retail real estate perspective or a repurposing standpoint, one must then add up the copious space taken up by parking lots for each store. Aside from perhaps the week before Christmas, Beske said they’re rarely full of cars.

As Joni Mitchell predicted more than half a century ago, that’s not easy on the environment. For instance, rainwater can’t permeate the pavement in these areas.

So every little peelback helps. And more broadly, there’s been a “paradigm shift,” according to Beske, in the way the suburbs are looked at from a real estate perspective.

The walkable environments that he studies allow people, he said, to better experience their communities and get more exercise and socialization, and Covid put what these residents want most in focus: mixed-use development, parkland, and open space.

“People are looking for an experience, and that’s what’s going to bring people out again, and Walmart doesn’t provide that traditional experience I think that people are looking for, or any of these single-use big box retailers,” Beske said. “It’s just hard to recreate what we’ve lost in our communities.”

There’s a circle of life element to it all, too.

Mom-and-pop shops that got wiped out by Walmart decades ago are coming back, and not just randomly. It’s because more and more Americans want them back.

As Beske indicated, it may be difficult, though not impossible, to just tear down a Walmart and start over with fresh land.

“A lot of these anchors offer a large amount of square footage with a minimal investment to retrofit them to a need, but some of the largest value, I think, that can be had from an empty Walmart store is the land that it sits on, and being able to reimagine that land as something different altogether,” he said.

It’s already been done successfully in cities like Charlotte and Nashville, where Beske said former big box anchors have been turned into charter schools.

Elsewhere in Nashville, he said parts of 100 Oaks Mall in Nashville are now home to Vanderbilt University Medical Center and some 30-plus offices associated with the hospital system.

Community centers, community colleges, and libraries are some other potential uses, along with distribution hubs for companies like Amazon – again proving how much consumer attitudes have shifted since the start of the pandemic.

With housing demand across America still “massive,” according to Beske, teardowns and rebuilding as mixed-use space, with a retail element, could be crucial to easing a choked pipeline of multifamily homes.

Beske said his research indicates that based on area median income, if 1,000 to 2,000 housing units can be located within the radius of a five-minute walk, the occupants therein can support one block of Main Street retail.

Putting that in perspective, it might take five minutes on a busy day just to walk from the back of a Walmart parking lot to the store’s front door.

“80% of net new households in the next few decades are going to be singles, and couples without children in the home,” Beske said. “And the preference for these cohorts is that they live in walkable, mixed-use, urban environments.”

So don’t look now, but before long, your neighborhood Walmart could be the site of an apartment building, condo complex, school, office, hotel, boutique, or medical center.

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