Having saturated suburbs, retailers ease back to cities

Talks under way to bring Target, Marshalls to Mondawmin

December 16, 2006|By Andrea K. Walker | Andrea K. Walker,Sun reporter

After years of building in the suburbs with open land and large numbers of shoppers, big-box retailers and others are seeking new business in shopping-deprived cities such as Baltimore by pumping new life into urban neighborhoods and rethinking their cookie-cutter image.

Mondawmin Mall in West Baltimore stands to be the latest to benefit from the retail renaissance in cities across the country. General Growth Properties, which owns Mondawmin, said this week that it is in negotiations to bring Target, Marshalls and Shoppers Food Warehouse to the shopping center, which now houses mostly sneaker and urban apparel stores.

Retailers have been trickling back into cities for the past decade, but the momentum has picked up in recent years as young professionals and empty-nesters have traded the suburbs for urban living.

America's bedroom communities can sustain only so many Wal-Marts and Targets, retailers have discovered. As the suburbs become crowded with stores, retailers are rediscovering vacant or tired urban shopping centers with hopes of tapping new revenue.

"Cities are the last frontier for big-box stores in this country," said Michael Beyard, senior resident fellow for retail and entertainment development at the Urban Land Institute. "They only have two areas where they can grow, old central cities and overseas."

It's a strategy taking hold across the country with consumer favorites such as Home Depot, Best Buy and Walgreens showing up in Manhattan, Baltimore and Richmond, Va., respectively. Home Depot, for example, has opened smaller city stores to take advantage of vacant retail space, and it sells distinct home improvement merchandise for urban areas. Walgreen Co. has been a leader in reinvesting in the city in Chicago and elsewhere with new pharmacies.

For Target, which began venturing back to urban areas in the 1990s, its Baltimore store would be the city's first.

Other retailers

But the city has already seen other major retailers arrive during the past few years. Best Buy recently opened a store at Lockwood Place on Pratt Street. Filene's Basement is scheduled to join the development soon. Home Depot has outlets at Reisterstown Plaza and on Eastern Avenue, while Wal-Mart Stores and Sam's Club now operate stores at Port Covington in South Baltimore.

Historically, retailers have steered clear of cities where vast amounts of land weren't available for large stores with parking lots. The suburban-model, 100,000-square-foot prototype doesn't fit well on a crowded city block. The design and build-out can be more expensive and complex. City buildings are also more likely to be subject to historic preservation standards.

Now retailers are developing smaller store prototypes with design features such as multiple levels, escalators for shopping carts and underground loading docks that better suit urban neighborhoods.

Smart space

"All these retailers have begun to understand that you don't necessarily have to have the biggest space in the world - and obviously you can't find that in most cities," said George Whalin, president and CEO of Retail Management Consultants in California.

Target was one of the early big-box retailers to take a chance on urban areas. It began opening multi-level centers in old department stores in the late '90s. In 1998, the retailer opened in the former three-story J.W. Robinson's department store building in Pasadena, Calif. It also opened multi-level locations in Atlanta, Gaithersburg and downtown Minneapolis, where the company is based.

A typical Home Depot store is 102,000 to 110,000 square feet, while an urban location is as small as 60,000 square feet. One of its Manhattan stores has an underground loading dock. Its city locations also carry different merchandise and services, such as smaller washers and dryers for apartments and a 24-hour locksmith.

"If you want that space and you want to build that store, you've got to be more accommodating than you would in a suburban environment," said Don Harrison, a spokesman for Home Depot. "If you can find a smaller space and build a smaller footprint, there is still an under-served market inside your city limits."

Wal-Mart has opened in an old department store in California, a former public housing complex in New Orleans and an old shampoo factory in Chicago, said spokesman Daphne Moore.

Following shoppers

Cities were once the home of retail hubs, but in the 1960s the shopping began following residential flight to the suburbs. Department stores chose shopping malls over Main Streets. Big-box retailers preferred strip shopping malls.

As retailers started to rediscover cities, the national chains typically sought out tourist areas, such as Baltimore's Inner Harbor, or core downtowns. Now, retailers are moving into neighborhoods beyond downtown, such as the Mondawmin Mall project.

Retailers don't normally want to be the pioneers, waiting for others to try the market first.

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