Toys “R” Us closures create next evolution in big box tenants
PHOTOS/GRANT WELKER
Toys "R" Us's store on Route 12 in Auburn is one of seven the company owns in Central Massachusetts due to close.
For as long as retail plazas have dotted area roadsides, there has been turnover in the names that adorn shopping centers. The days of Bradlees and Caldor led to Sports Authority and Circuit City, and today closures are bringing new tenants yet again.
Except these days, there aren't nearly as many chains to take their place.
The quickly changing retail landscape took a new hit with the closure of a Sam's Club in Worcester in January and the impending closure of Toys “R” Us in Auburn, Leominster, Northborough, Millbury and Framingham.
That leaves shopping-plaza landlords looking for new tenants again, and they're more likely today to be discount retailers, fitness centers, entertainment uses or even offices.
“It's a very, very difficult undertaking” to find new uses for vacant big-box stores, said Donald Bouchard, senior vice president and co-head of the valuation and consulting services at Boston-based Lincoln Property Company.
“There's a different focus now for this generation,” Bouchard said of younger shoppers, particularly Millennials, who are more likely to spend their money on food or entertainment than on traditional retail. “To get someone into a shopping center today requires more and more of the experiential issue. You're not just going there to buy stuff.”
Health care, entertainment & exercise
Already, some former large retail spaces are being converted to less-traditional uses in Central Massachusetts.
At the Auburn Mall, the former two-story Macy's home goods store – previously a Caldor – is being converted into offices for Worcester-based Reliant Medical Group, a restaurant and small retail space. Reliant has also moved into the former Linens 'n Things at Bay State Commons in Westborough. At the Natick Mall, the upper floor of a two-story Sears is planned to become a Dave & Buster's bar and arcade location.
Vacancies have created new opportunities for chains to move into spaces left over from defunct or shrinking retailers.
Burlington Coat Factory has moved into a former Circuit City in Leominster and a former Bradlees in Worcester. Ocean State Job Lot filled a former Linens 'n Things in Leominster and an Ames in Sturbridge. Big Lots has taken former Rich's department stores in Gardner and Fitchburg.
Planet Fitness has also taken advantage of space left over by others.
Brian Kablik, the president and CEO of a franchisee company owning Planet Fitness locations in Worcester, Marlborough, Shrewsbury, Franklin and elsewhere, said he's watched the Toys “R” Us struggles closely, anticipating potential new gym locations.
“When there was a big economic downturn and we saw a lot of retailers go under, for us, we were uniquely positioned because our business model is so resilient during an economic downturn,” Kablik said.
Struggles in the industry are sad, he acknowledged, “but for us, it's just a beautiful opportunity for us to grow.”
It has even spurred Planet Fitness to change its gym layouts, Kablik said. Stores were typically 10,000 to 15,000 square feet years ago, but they now are more likely to be 20,000 or even close to 30,000 square feet in order to fit into a space left behind by a larger retailer.
A more typical shopping center of the future may look like the Apex Center of New England in Marlborough, which has two hotels and a sprawling 80,000-square-foot complex with laser tag, go-karts, bumper cars and more.
A more typical shopping center of the future may look like the Apex Center of New England in Marlborough, which has two hotels and a sprawling 80,000-square-foot complex with laser tag, go-karts, bumper cars and more.
Shoppers World in Framingham is working to broaden itself beyond retail.
A proposal to the city last month calls for a 175-unit, seven-story apartment building with two retail spaces on what is now a parking lot.
Shoppers World found new tenants – HomeSense and Sierra Trading Post, both TJX Cos. chains – for a space left by Sports Authority, and sits in a major shopping hub next to the Natick Mall.
Shoppers World still has a vacancy left from when Bob's Stores closed last year, and an empty Toys “R” Us and Babies “R” Us on the way. Ohio-based DDR Corp., the plaza owner, didn't return a call for comment.
Filling a 133,000-sq.-ft. space
The closure of Sam's Club in Worcester – which leaves none remaining in Massachusetts – has left a major vacancy at a high-profile location in a key gateway to the city along Route 146.
Worcester Crossing's other anchor is a Walmart Supercenter, which complicates the prospect of a department or grocery store taking Sam's Club's place. Walmart retains control of the 133,000-square-foot building.
“We also don't want to put someone in that's going to hurt our anchor tenant either,” said Ken Fries, the vice president for leasing and acquisitions for Needham-based RK Centers, the owner of Worcester Crossing and more than 30 others across Massachusetts.
A number of untraditional uses may go into the Sam's Club space, Fries said, but nothing is imminent.
For all the upheaval in retail, most major Central Massachusetts shopping plazas appear to be doing well.
Northborough Crossing is losing Toys “R” Us but is anchored by Wegmans, Kohl's, Dick's and BJ's Wholesale Club, which haven't had widespread closures.
RK Centers' plazas, which include the Shoppes at Blackstone Valley in Millbury and RK Centre on Route 20 in Marlborough, are 90 percent or more leased, Fries said.
Adapt & survive
Shopping centers have rolled with the punches in the past.
“Generally speaking, we've seen this before,” said Greg Maloney, the president and CEO of retail for the real estate firm JLL, which has local offices in Boston. “I do think this is going to be a stage like everything.”
Maloney said he finds forecasts calling for the closure of so many malls to be entirely overblown.
“Those that make the change will survive,” he said.
The Mall at Whitney Field in Leominster has replaced a Bradlees and Circuit City before, and will have to do the same for a Toys “R” Us. Its other large tenants – Macy's, Sears and JCPenney – have closed many locations elsewhere.
Leominster Mayor Dean Mazzarella said the city prides itself on building a personal relationship with property owners like Los Angeles-based Vintage Real Estate, which owns The Mall at Whitney Field.
“That's really where the malls are going now, is entertainment,” he said. “It's about, how are you drawing people in? The concept just has to change.”
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