New life for big boxes

CEDAR RAPIDS — When MidAmerican Aerospace executives were looking for a large, vacant building to house their expanding aircraft-parts business, the 127,000-square-foot former Kmart on Cedar Rapids's west side was the only option.

'This was the last existing space we could find that was suitable,' said John Huey, MidAmerican managing director. 'We are in the process of trying to buy the building.'

While communities nationwide have struggled in recent years to find new uses for thousands of vacant former Best Buy, Kmart, Montgomery Ward, Target and Wal-Mart buildings, the Corridor has been successful at redeveloping big-box commercial properties.

Collins Crossing, the former Kmart complex across Collins Road NE from Lindale Mall in Cedar Rapids, is the most recent successful conversion of a former big box store.

RCG Ventures of Atlanta, Ga., owner of the 150,200-square-foot retail complex, gutted the structure after Kmart closed in December 2013. Leases were not renewed with the majority of the tenants, with the exception of Video Games Etc, which relocated to new space in the complex.

With plans for a major remodeling in hand, RCG Ventures was able to recruit Hobby Lobby, the Oklahoma City, Okla.-based arts and crafts retailer; HomeGoods, the Framingham, Mass., off-price home fashions chain; Greensboro, N.C.-based Fresh Market supermarket; Shoe Carnival, an Evansville, Ind.-based shoe retailer; and Firehouse Subs, a Jacksonville, Fla., restaurant chain.

'In one year, we've gotten five of the six national tenants that we've been recruiting for the last three or four years,' said Scott Olson, a commercial Realtor and developer as well as a Cedar Rapids City Council member.

' ...

Timing is everything with national retailers, who have a lot of options. They want the right location with the right rates and the right landlord.'

Many big-box stores — including earlier-generation Walmarts, Bed Bath & Beyond, Home Depot, Kmart, Lowe's and Target — are in the 60,000- to 140,000-square-foot range.

Sarah Schindler, an associate professor at the University of Maine School of Law, said local municipalities need to take a role in helping redevelop what she calls 'ghostboxes.'

'Because local governments control land-use decisions, and thus made deliberate determinations allowing big box development, those same local governments have both an economic incentive and civic responsibility to find alternative uses for ghostboxes,' Schindler said. 'Big-box abandonment is a nationwide problem that should be addressed at the local level.'

The 96,500-square-foot former Target store at 3750 Williams Blvd. SW in Cedar Rapids was remodeled in 2006 to create Williams Square. The initial tenants were Stuff Etc, a Coralville-based consignment store chain, and Harbor Freight Tools, a Modesto, Calif., hand and power tool retailer.

When the June 2008 flood heavily damaged Options of Linn County at 1019 Seventh St. SE, the sheltered workshop found a temporary home in Williams Square between Harbor Freight and Stuff Etc.

But the closing of Stuff Etc on July 31, 2011, paved the way for the Cedar Rapids Public Library to relocate its westside branch from Westdale Mall. The 21,000-square-foot Ladd Library opened in February 2013 after the space was extensively remodeled.

Williams Square's latest transformation began earlier this year with the purchase of the property by William Hinks, a successful Sioux Falls, S.D., furniture retailer. After negotiating lease extensions with Harbor Freight Tools and the Cedar Rapids Public Library, Hinks contracted with Olmstead Construction of Cedar Rapids to remodel the remaining 55,000 square feet of the complex for an Ashley Furniture HomeStore that opened last month — the first of eight new stores in Iowa that Hinks plans to open within the next three years.

Different uses

While Collins Crossing and Williams Square were repurposed primarily with retailers, the reuse of a 120,000-square-foot former ShopKo store at 4700 Tama St. SE on Cedar Rapids's border with Marion was a more varied story.

Second City Square was redeveloped in 2005 as a mixed-use property by owners Gerry Ambrose, Wayne Meier and Hunter Parks. Tenants include Carpetland USA, Elegant Repeats, Hancock Fabrics, Infinity Contact, Midwest Athletic Club and Physiotherapy Associates.

Ambrose, in a June 2012 interview, said the developers were fortunate that the owners of Infinity Contact needed a large, open area for a customer contact center and offices.

'Carpetland was looking at the same time, and we were able to negotiate the end cap for them,' Ambrose said. 'We had done a nice remodel for a furniture store that went out of business, and my fiance's mother knew the owner of Elegant Repeats.

'Her building had been bought by St. Luke's Hospital and we were able to negotiate a lease for the furniture store space.'

Another property Ambrose redeveloped, in 1997, was the former Wardway Plaza at 1101 S. Riverside Dr. in Iowa City.

'Montgomery Ward actually had a second floor that it was using for a warehouse,' he said. 'We put in a passenger elevator and turned it into a health club.'

Fin and Feather now is located in the first floor, along with an Arby's restaurant and a number of other tenants in what was originally an Eagle supermarket.

Challenges

Developers repurposing large former retail stores face a number of challenges, according to Larry Sharp, a longtime Cedar Rapids commercial Realtor.

'If the building is really deep, that presents a challenge because smaller retailers don't want that much space,' Sharp said. 'Realistically you need a couple of national tenants to attract smaller stores.'

Olson said the exterior of the building needs to be refaced or changed significantly so it doesn't look like an old Kmart or Target.

'The big box stores typically have a single set of bathrooms in the middle of the building,' Olson said. 'Splitting the building into smaller spaces requires the installation of separate bathrooms.

'Each tenant also has to have their own electrical, water and sewer service.'

At Williams Square, Olson said the only thing that is shared by the tenants in addition to the parking lot is the building's sprinkler system.

MidAmerican Aerospace's Huey said the proposed purchase and extensive interior renovation of the former Kmart at 2727 16th Ave. SW in Cedar Rapids will involve more than just the creation of a much larger warehouse and offices for the privately owned company.

'We want to be good neighbors to the residential area behind the property,' Huey said. 'The south four acres behind the store is zoned for residential use. We had a neighborhood meeting where we asked the residents to talk about some of the biggest problems they had.

'They said a number of residents have serious problems with water runoff. Even though it won't be required, we're going to put a stormwater retention basin in the northeast corner of the parking lot.'

MidAmerican Aerospace employees enjoy an NBA-scale basketball half-court facility in the company's existing 45,000-square-foot building at 280 Blairs Ferry Rd. NE as well as volleyball at the nearby Volleys.

Huey said the basketball court will be moved to the new location and a volleyball pit is being considered for the area behind the building.

The existing MidAmerican Aerospace building has just under 20,000 square feet of warehouse and inventory storage space. Huey said the new building will more than quadruple that area, enabling the company to handle more parts for larger airliners.

'The landing gear are three times as big as what we have been handling,' Huey said. 'We're going to have a record year in 2014, and we're planning for future growth.'