The headline screams, “Big Box Blight A Product Of The Great Recession.” Well, no, it’s not. One can always dig a little deeper and get at a truth behind the truth, but in this case little digging is needed. Yes, the economy isn’t going gangbusters at the moment. Yes, stores are closing for a lack of consumer spending. No, the “Great Recession” isn’t the reason.
According to the Wall Street Journal more than 1,000,000,000 square feet (that’s 1B) of retail space has been built in our nation’s 54 largest markets since 2000. Retail space now measures 38 square feet for each and every person in those 54 regions. Too much retail space exists for the number of residents. Only an incredibly optimistic projection of consumer spending made in the fall 2007 would have predicted a need for retail space.
In some respects the problem is less bad in St. Louis than elsewhere. In places like Fort Worth and Dallas, TX, Mesa, AZ and Fort Myers, FL, retail centers of 500,000 square and larger sit vacant. Some will not be finished. Fifty proposed Home Depot stores have been canceled. St. Louis didn’t overbuild that way some places have. And the metro area compares will to cities such as Denver and Kansas City
I do not know specifically what problems these cities and others (see graphic below) experience, but Fox2 nails it when citing the use of TIF to lure big box retail and the subsequent tax revenue by municipalities in the St. Louis area. The numbers do not indicated that the problem is “particularly acute in Saint Louis” as Fox2 asserts, but again, they do highlight one significant reason that it is a problem here and they talk to the right people.
The notion of retail cannibalism is a problem across the country. It’s particularly acute in Saint Louis where big box retailers frequently close up shop in one location and open in another location. A former Wal-mart along Manchester road in West County only to open up just a few miles West. Why does it happen so often here? Blame it on short-term tax incentives and the way municipalities collect their revenue.
Overbuilding at a time when retailers were already struggling to survive. One study shows at least 20% of malls and shopping centers were under performing before the recession. Up until recently developers were still building all over Saint Louis often funded through millions of dollars in tax increment financing.
“Generally speaking the county is about a million people and the question is how much retail do a million people need?” Mike Jones
{retail statistic graphics courtesy of Lane Midwest Retail Report}
