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Adaptive Reuse in Retail

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By Steve Hage – Development Consultant, Miller Architects & Builders

In 1966 my father purchased the roller rink in Shoreview, MN with plans to convert it to a retail strip center in the growing suburban community. The name Village Square was chosen by the family during dinner one evening with an original tenant line up of Fred’s Barber Shop, Pella Windows Sales Center,Christiansen Pharmacy, Tom Thumb Market and a Polaris Snowmobile Showroom. As the community grew and the market changed the Pella Sales Center gave way to a video rental shop and the pharmacy became Carbone’s Pizza. Eventually it came time to sell as a larger Rainbow Foods looked to enter the market. 52 years later we find an upscale Kowalski’s Market open in the converted Rainbow building with a format that engages the consumer in an experiential setting.

The northeast corner of Kowalski’s sits just about where Fred’s Barber Shop was located. Throughout the 52 year history of this site there have not been any apocalyptic events, only the gradual change of the market place.

The same is true today with the decision of many large format retailers to close or downsize their stores. In most situations this is an opportunity to improve the financial performance of an asset as smaller format users typically will pay a higher rent which will more than cover the cost to convert. At Miller Architects & Builders we are working on several projects that have tenants exiting properties that were paying $5.50 per square foot rent and being replaced by junior box retailers paying $10 to $17 per square foot rents. Additionally as we right size the buildings we are finding opportunities to add outlots to the property at rents ranging from $30 per square foot to $48 per square foot.

Putting up a space available sign and seeing who shows up will not achieve the best long term results an adaptive reuse opportunity might have. Engaging a local leasing representative along with a quality design team that can meld the financial goals of the landlord with the realities of the market place will move projects along quickly and with the highest return. From a lifetime of being involved in adaptive reuse the key is an optimistic outlook that something great can be created through change.