The number of retailers selling, subleasing or reusing store space is growing in the Baltimore region, thanks in part to a recent spate of bankruptcies, retail experts say.
But factors such as changing consumer tastes and a trend toward larger stores with deeper inventories have also led to more store turnover."Tenants are far more dynamic now than they've ever been," said Geoffrey Booth, director of retail development for the Washington-based Urban Land Institute. "Americans love choice, and you've got more choice now than ever. It puts tremendous pressure on retailers to come up with more innovative formats to keep you interested."
Kevin Barrett, a retail specialist with KLNB Inc., said the Towson-based real estate brokerage firm has seen growth over the past five years in disposition work, or helping retailers shed unwanted stores. The number of retail clients seeking uses for outdated space has jumped 40 percent, he said."It's the process of getting rid of locations that are no longer desirable for that retailer," Barrett said. "Retailers, in order to compete, are constantly modifying and changing their prototype store sizes, sometimes to get smaller, but more often than not, it's been to get larger."
KLNB is working with retailers such as Wal-Mart, Shoney's, Roy Rogers, Super Fresh, Service Merchandise, AMF Bowling Centers, McDonald's, Weis Markets and Zi-Pani Cafe.
Wal-Mart is building supercenters, especially in Pennsylvania and parts of Maryland, and replacing stores of more than 100,000 square feet with formats that range from 155,000 square feet to 200,000 square feet.
Supermarkets are also battling for market share by closing smaller stores and building bigger stores that can accommodate prepared-food and gourmet departments. Supermarkets have grown from an average 18,000 square feet to 25,000 square feet two decades ago to an average 55,000 square feet today."Supermarkets generally are replacing a store with another not too far away and don't want the old store available to the competition," Barrett said. Sometimes, a grocer will continue paying rent or accept a lower level of rent from a subtenant. "Often it's merely cutting losses on their books."
Super Fresh is building a 56,000-square-foot store in the former Hechinger in Security Square Shopping Center near Security Square Mall. The rest of the 80,000-square-foot building, which will be reduced slightly in size, will be leased to small service shops, said F. Patrick Hughes, president and chief executive of the Lutherville-based Mid-Atlantic Realty Trust, which purchased the Woodlawn center this month."Right now we have more people that want to come in than space, because it's a high-traffic location," Hughes said.
The space opened up for Super Fresh after Hechinger closed its stores last year. The once-dominant home improvement chain failed to emerge from bankruptcy after a decade of fierce competition from Home Depot Inc. and Lowe's Cos. Inc. In an auction last year, Hechinger sold leases for seven of its Baltimore-area stores, including three to Home Depot, Kohl's Department Stores Inc. and Value City.
Other bankruptcies have included Valu Food and Caldor, which left large stores vacant around the Baltimore Beltway. Many of the Caldor leases are now in the hands of the shopping center landlords.
Hughes, the landlord for Lutherville Station, where a former Caldor sits empty, says he expects to sign a lease soon, based on strong interest from potential retail tenants."In areas where it's easy to buy land and get it zoned, there are a lot of long-term vacancies," he said. "We don't have that problem in Maryland, and in Baltimore County, it's hard to develop."
Changes in consumer eating habits have accounted for much of the recent turnover in restaurants, as consumers increasingly choose low-fat foods over fast-food. The Roy Rogers chain, acquired by McDonald's in the Baltimore-Washington area, is closing restaurants, while newcomers such as Quizno's, a fast-growing chain of Italian-style sub shops, are expanding in Maryland. Quizno's expects to open the first of about 75 planned shops in the Baltimore area this summer.
Barrett said KLNB is working with Shoney's to lease more than 10 stores in Pennsylvania, Maryland and Northern Virginia. The national chain is converting stores into new formats and closing under-performing locations.
International House of Pancakes has taken former Shoney's stores in Randallstown and in Virginia. Denny's took over the Westminster Shoney's and a local restaurant is expected to lease the Glen Burnie location.