Big box retailers have been closing at unprecedented rates, even before the rise of COVID-19, leaving landlords in a precarious position. Landlords must now think of creative ways to re-purpose their spaces to meet the needs of shifting consumer demand, maintain steady foot traffic and generate revenue in alternative ways. Consequently, some landlords across the country have decided to re-purpose vacant big box stores into apartment complexes, entertainment venues, coworking, and industrial spaces. In Maine, like many parts of the county, industrial properties are in high demand as supply remains low. Furthermore, with construction costs at an all-time high, adaptive reuse projects aimed at converting big box stores into logistics, distribution, and fulfillment centers could serve as a driving force in creating more supply throughout the state.

While anchor department stores such as JC Penny, Macy’s, Sears, Kmart, and others continue to close stores or utilize smaller footprints across the country, only time will tell how the retail industry in Maine will be impacted. Thus, it is important for landlords to be proactive and get creative in how they reposition their properties. One recent example in Maine is the repurposing of the former Flagship Cinema in Lewiston. The Flagship Cinema located at 855 Lisbon Street in Lewiston, otherwise known as One Gendron Place, shut its doors in 2015 leaving a massive vacancy in the complex. Recognizing the challenge of filling the space with a traditional big box retailer, ownership took a proactive approach by converting the cinema into an 83,000 SF warehouse facility, which was recently leased to NEPW Logistics. With the accelerated growth of Maine’s industrial market as the pandemic continues, landlords will be forced to think outside of box to fill vacancies in their big box retail centers where demand is lagging.

Another advantage of converting big box retail space into logistics, distribution, and fulfillment centers is their location. Traditional anchor department stores tend to be located in high traffic areas near highways and where public transportation is readily available. Not to mention, these stores are known for paying below market rents under long-term leases, which makes these spaces perfect contenders for adaptive reuse projects. As the market continues to trend towards e-commerce, the combination of big-box stores being near densely populated areas, along with the ability for landlords to capture higher rents with industrial users, should spur landlords to re-purpose their big box stores and bring more industrial space to the market.

Although re-purposing big box retail stores into industrial space is an excellent solution for creating more supply in Maine and around the county, it does not come without challenges. Re-purposing struggling or vacant big box retail space certainly has the potential to create added value for owners, but obtaining site plan approvals, variances, and undergoing rezoning efforts can become a hindrance without a carefully planned strategy. With that being said, Maine is in desperate need of more industrial development, and this is an excellent way for owners to get their creative juices flowing and keep pace with industrial demand.