Underutilized Property

Since the beginning of the century, the United States has seen significant growth in annual e- commerce sales. Shifts in consumer behavior, particularly among millennials, have contributed to a near 15% increase in online sales revenue every year since 2010. While e-commerce only makes up about 10% of the U.S.’s total retail annual revenue (with the remaining 90% coming from traditional brick and mortar stores), its unprecedented growth and accessibility has some forecasting e-commerce’s eventual reign over the retail sector. Such a changeover will likely cause traditional brick and mortar businesses, such as strip malls and big box stores, to become a less prominent component of the landscape.

To put Lexington’s commercial retail landscape into perspective, the city is currently home to 71 square feet of retail space per capita, about 1.5 times the national average of 46.6 square feet. Lexington also has a higher percentage of retail space as compared to similarly sized cities and other industrialized countries. As a city with a larger than average retail footprint, it is fair to assume Lexington will be disproportionately affected by changes in the retail market. In recent years, Lexington has already experienced the trickling effects brought on by shifting consumer habits and preferences, with the closure of several prominent national retailor locations. In response, Imagine Lexington brings to the forefront the flexibility and creativity needed to facilitate the reuse, revitalization, and/or enhancement of existing retail space, both utilized and underutilized. Recommendations to allow for a greater range in development types, particularly high-density residential, are supported by this policy, and the B-6P and mixed use zones in particular provide these opportunities.

Other U.S. cities have already begun finding innovative ways to revamp their underutilized retail spaces to better accommodate the needs of the surrounding population. One of the most noteworthy cases of adaptive reuse of retail property occurred in America’s first mall, the Providence Arcade Building in Rhode Island (built in 1828). After years of decline, the majority of this space has been converted into a community of micro-apartments, marketed to young professionals seeking affordable housing. The design features small retail businesses on the first floor, while the top two floors are composed of residential units. In another example of the revitalization of a declining shopping mall, the Main Line Health Center in Exton, Pennsylvania implemented an adaptive reuse project that converted the space into an active healthcare facility.

One of the central themes of these projects is the concept of filling a specific need of the local consumer base. In the case of Lexington, the increased need for housing units, such as what was achieved with the Providence Arcade project, could present an opportunity for developers and community designers to encourage residential uses on existing retail properties, whether by adding on to an existing property or implementing an adaptive reuse of an underutilized building. As most large retail centers are located along major high-traffic corridors, incorporating this residential component into existing developments will also increase the viability of enhanced mass transit by increasing potential ridership.

This type of redevelopment can be mutually beneficial for the city, the future tenants, and the property owners. This additional development opportunity will allow the landowners greater return on their properties, and should also bolster the success of the remaining retail entities on the site, building in a customer base within close, walkable proximity, as well as connecting other parts of the city to the development through enhanced transit. Existing retail developers interested in strengthening their customer base should consider the incorporation of not only residential uses, but less traditional retail services such as small groceries, pharmacies, gym/fitness centers, and locations for medical and senior care.

As mentioned throughout previous themes, a growing number of residents now prefer to live and spend time in areas that are walkable and well-incorporated. Retail spaces that are within close proximity to housing, restaurants, public spaces, and entertainment opportunities could create the community-based customer experience that people are looking for.