The Wal-Mart Effect: When Wal-Mart Leaves Town

Many communities are eager to see a new Wal-Mart come to town, but few think of the effect the retailer will have if and when it leaves. This article from Minnesota’s St. Cloud Times gives a local perspective to the retailer’s global prospects. Visit Battle-Mart for more information about fighting Wal-Mart in your local community.

Wal-Mart’s exit is boon, bane for communities [St. Cloud Times (Minn.)]

An empty Wal-Mart building sits along a stretch of road in Little Falls and shoppers have been rerouted to a newer, bigger Wal-Mart down the street.

Its owners have taken care of the old building after the Wal-Mart Supercenter was built in August. It’s been repainted a shade of light green, masking signs of what once thrived there.

At any given time, about 300 to 400 former Wal-Mart stores sit empty around the nation, in some cases for as long as five to seven years, said Ken Stone, a retired professor from Iowa State University who has studied Wal-Mart for about 20 years. Those empty buildings can be a blight to a community and area businesses if they sit untouched for too long.

“It’s a real problem, there’s no question about it,” Stone said.

But as Wal-Mart prepares to close two St. Cloud stores as early as 2009, residents and businesses can take some comfort in the situations nearby. Minnesota cities have been fortunate to have the spaces fill quickly, and Wal-Mart has been a responsible property owner, Minnesota business leaders said.

In Willmar and Brainerd, empty buildings found new owners quickly. In Willmar’s case, it took just a month before a company called Runnings Farm & Fleet took over the space.

Last week Wal-Mart announced its plans to close its St. Cloud discount store and Sam’s Club, and open a Supercenter and a new Sam’s Club in Waite Park. St. Cloud-area retail experts and business leaders are confident that when the company closes its St. Cloud stores, it won’t have a problem finding prospective buyers. A Wal-Mart spokesman did not return calls for comment.

St. Cloud already has empty retail space, such as the former Media Play store on Division Street, which has been up for grabs since January 2006. But some observers believe it’s just a matter of time before new companies come in.

“The bottom line I just go back to is that those property taxes will be paid by the property owners until they lease or resell them,” said Teresa Bohnen, president of the St. Cloud Area Chamber of Commerce. “It’s not a big hit to the economy of St. Cloud or the city of St. Cloud.”

Retail landscape
If Wal-Mart vacates its buildings, it will leave prime property for the next buyer, said George Karvel, a real estate professor at the University of St. Thomas and former St. Cloud State University real estate professor.

Combined, the Wal-Mart and Sam’s Club buildings have an estimated market value of $12 million, said Steve Bruggeman, assistant city assessor.

It’s ideal property for redevelopment, Karvel said. Either a company might want to move into the space, or they might want to tear it down and build new.

St. Cloud is a good place for retail, too, as it’s the biggest shopping center north of the Twin Cities, Karvel said.

“The fact that Wal-Mart is expanding reflects the St. Cloud market area has grown over the last five to 10 years, which opens the door to retailers,” Karvel said.

And if it’s not retail, it could be another kind of industry to move in. Plenty of surprises have come to St. Cloud, he said, citing Bed, Bath & Beyond and Barnes & Noble.

Bohnen is also confident a new owner will grab the space quickly. Each property will have distinct attractions, and a place like Media Play’s old space is different from the Wal-Mart or Sam’s Club sites. “It’s finding the right match with the activity,” she said.

In an interview last week, a Wal-Mart spokesman characterized its project as in early development stages. Once a deal is made, the company will look for someone to take over the spots, John Bisio said. Bisio is a Midwest representative for Wal-Mart.

Experience
It happened to Little Falls. And to Willmar, Brainerd and Hastings.

In all those cases, Wal-Mart closed its discount stores and built a Supercenter nearby in the past five years.

But unlike some areas of the country, spaces filled sometimes as fast as 30 days.

In Hastings, it took four years to fill up. But Wal-Mart used its facilities for storage and took care of the building, said Michelle Jacobs, president of Hastings Area Chamber of Commerce.

Still, the vacancy was an issue for some customers and businesses until a Coborn’s store filled the space this fall. “It wasn’t something the southern part of the city wanted to see,” she said.

When Wal-Mart closed in Willmar, rumors were rampant: Would it be a Kohl’s? A Red Lobster? What would happen to that space?

“Your fear is that when you have a big corporate store, where all decisions are made some place else, are they keenly aware of how important it is to keep things looking nice? Are they being a willing partner at the table?” said Ken Warner, former planning commission member and current president of the Willmar Lakes Area Chamber of Commerce.

But within 30 days, they had a new owner. Before that, the company painted the vacant store.

“Wal-Mart was a responsible partner in the community and did their best not to just walk away from it,” he said. “I think that they went above and beyond what most businesses would do by repainting it.”

Jim Andres, chairman of the Little Falls Area Chamber of Commerce board, said the fact that Wal-Mart has been empty since the Supercenter opened in August is not an issue at this point.

But he said the million-dollar question remains: What makes the space marketable?

Posted by Alex Goldschmidt on Tuesday, December 18, 2007

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