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Metro area cities prepare for 'retail apocalypse' as big box stores close

Big box closures pave way for future city centers
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ARVADA, Colo. — When Sears announced last week it would close the last Kmart standing in the Denver metro area, many were not surprised. The Arvada store that opened in the 1960s seemed to be a relic of a different era.

“We knew it because every time you drive by there’s no cars,” says Maryann Sorrentino, a long time Arvada resident.

It’s the latest example of a nationwide trend that some have dubbed the “Amazon effect” or worse, the “retail apocalypse."

“Every day you hear about a new retailer that’s closing doors, reducing number of stores” says Neil Marciniak, economic development manager for the City of Centennial. “For many of these store we don’t know when it’s going to happen, but it’s no longer a question of if those stores are going to be around. We think at some point they will close, they will downsize, in some way that form of retail is going to change.”

GALLERY: Big box store closures changing Denver's retail landscape

In the past, one big box store closure would be followed by a line of retailers waiting to take over the space. Economic developers around the metro agree that’s no longer the case. Fewer retailers are able or willing to backfill existing big boxes. Even retailers that are managing to keep their physical stores open would rather do it in a smaller space.

“An Office Depot used to be 20,000 square feet and now they’re 8,000 square feet,” says Tim Gonerka, senior retail development manager for the City of Aurora.

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With fewer obvious tenants to fill these empty big boxes, shopping centers are often left with vacant warehouses and vast, empty parking lots. In the worst cases, the stores sit idle for years. The old Kmart at Evans and Monaco that closed five years ago is unquestionably an eyesore. Sears won’t sell it for a price the city of Denver wants to pay.  But Denver isn’t the only city that has struggled with the conflicting interests of property owners, developers and government entities.

“It comes down to money often times,” says Centennial’s Marciniak. “None of these centers are as easy as just plugging in a new tenant into an empty box."

Centennial had a retail vacancy rate of 5.2 percent in the first quarter of the year, higher than the average of 4.4 percent for the Denver metro area.

This year brought some positive movement. Vasa Fitness finally took over an old Safeway location in the Willow Creek shopping center. But just across the street, Hobby Lobby is leaving Quebec Village. It will soon open in its new location, the old Sports Authority on County Line in Lone Tree. Sports Authority filed for bankruptcy in 2016.

But rather than just moving pieces and plugging holes, economic developers are looking at the long term future for shopping centers and their vast parking lots. They envision having more mixed use areas, combining residential, office and retail in one area.

“So what I think you’ll see is some of those big boxes and big parking lots actually converted into mixed used. It could be office, it could be housing,” says Aurora's Tim Gonerka.

“It may be the marketplace food hall concepts, or more dense residential, or office space, continuing that main street mixed used theme like you see at The Streets at South Glenn (in Centennial)” says Marciniak. “Each of these empty boxes creates an opportunity to reimagine these centers.”

"The power centers and shopping centers of the future are going to look night and day different than they look today because of the changes we’re seeing in retail," says Arvada Economic Development Director Ryan Stachelski.

Reimagining the centers of the future isn’t an easy task. Economic developers are charged with planning for the next 25 to 30 years of these spaces. And even with the prospect of vibrant new centers bringing life to a dilapidated strip mall, some neighbors still long for the good old days.

“It’s memories, memories,” says Maryanne Sorrentino. “I mean you still have them...but when you drive by...it was growing up. This was our town."