Rare News Desk
Atlanta’s suburban growth was buoyed for decades by an insatiable appetite for shopping centers anchored by big box retailers.
Videos by Rare
That age may be coming to an end with ongoing announcements of shopping giants, from Kohl’s to Kmart and Sports Authority, that are either cutting back or wheezing their way to an anticipated grave.
As they close their doors, shrinking chains may leave “ghost boxes” in once thriving shopping destinations, because the stores’ colossal size make them hard for adaptive re-use.
RELATED: 9 things you should never buy at Walmart
“The era of big box retail growth is over,” said Greg Charleston, senior managing director of consulting and financial advisory firm Conway MacKenzie Inc. “The concept was really big in the 1990s, but it is not a very competitive business these days.”
One reason: the Internet. Online shopping is more efficient for many consumers, who often only go to big box retailers to “showroom,” the act of viewing what you want in the store — such as a TV — then buying online.
Big box retailers already gone include Circuit City, bookseller Borders, Blockbuster and any record shop you can remember. Soon to join them may be Sears, electronics chain HH Gregg and office product leaders Office Depot or Staples, whose proposed merger was nixed by a judge on Tuesday. Sports Authority, which recently filed for bankruptcy, will soon auction properties.
RELATED: This retailer is shuttering all 450 of its locations
That could have long-term ramifications for metro Atlanta. Fewer shopping outlets means less tax revenue for county coffers, putting more strain on some communities whose tax base have already degenerated because of depressed home values.
The missing stores have touched every area from around North Point Mall in Alpharetta to parts of Clayton County and west to the Greenbriar community. For instance, shopping destination Avalon has lured stores in power centers around North Point such as Crate & Barrel to move to there instead.
Metro Atlanta’s retail vacancy rate was 7 percent in the first quarter of 2016, according to retail analyst CoStar Group. The national retail vacancy rate was 5.6 percent in the first quarter of 2016.
Some retailers saw the writing on the wall. In the early days of the 2000s, Atlanta-based Home Depot was building new stores almost every 48 hours in a bid to tap into the nation’s housing boom and the easy credit from banks for new washing machines and hardwood floors. Today the company opens only a few stores a year, mostly in Mexico.
“We made a strategic shift several years ago from growing sales through new store openings to increasing revenue within our existing stores,” spokesman Stephen Holmes said.
Some chains buck the tide and keep building. Nebraska-based outdoor gear retailer Cabela’s said late last month that it plans to open a new 70,000-square-foot store in McDonough. The location, slated to open fall 2017, will be part of the new Jodeco Atlanta South development in Henry County off Exit 222 on Interstate 75.
Ryan McCullough, a senior real estate economist for CoStar, said Atlanta’s absorption of big box stores is better than the nation’s, despite the higher retail vacancy rate. The vacancy rate for big boxes metro Atlanta peaked at 11.4 percent in 2009, but is now at 3.7 percent. The U.S. vacancy rate for big boxes is 4.7 percent.
The problem is the vacancy absorption is not even, he said. Where retailers in the past used housing growth as a guide for expansion, they now only go to shopping centers with proven sales records.
Some chains have seen the vacancies as an opportunity. Gym giant L.A. Fitness took over a former Target store in Conyers and the old Tower Records in Buckhead. Grocer Aldi replaced an Office Depot in Peachtree City. In Duluth, A Circuit City in Duluth became a Studio Movie Grill.
But Chris Lemley, a marketing professor at Georgia State University, said the future for big box stores is hazy. The cost of housing so much inventory will make less sense as online continues to chip away at retail purchasing. That will put more pressure on store operators to trim unprofitable stores and add to the growing list of vacancies.
“They are just going to keep getting squeezed,” he said.
