If you work in retail — or know someone who does — here’s a scary statistic: Between 20 percent and 25 percent of U.S. malls will close in the next five years, according to predictions from financial analysts.
It’s not just jobs that are at stake; sales tax revenue used to pave roads, hire police and light up City Hall is in jeopardy, too.
Topping the most vulnerable list: Generic indoor malls of the 1970s and ’80s that have fallen victim to changing consumer tastes and online shopping (thanks, Amazon).
But standalone stores aren’t immune from the downturn, as we’ve seen on the Central Coast. Consider, for example, the Madonna Plaza/SLO Promenade shopping area off Highway 101. The behemoth that once was Gottschalks and later, Forever 21, is vacant (though some of the space will be occupied by a Sprouts market). Other large spaces, including Sears, HomeTown Buffet and Staples, are vacant as well.
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Not that all the news is glum; major chains like Best Buy, Petco and Kohl’s continue to draw customers to the shopping centers, as do smaller specialty stores and restaurants. But for how long? Retail may not be in its death throes, but it is undergoing a major transformation and businesses that don’t adapt may not survive.
With that in mind, we focus on the Madonna Plaza/SLO Promenade, not because we believe it’s on its last legs, but because this is an opportunity to think ahead — to 2030, let’s say — and brainstorm some futuristic game plans.
As an exercise in creative thinking — and without getting into the nitty-gritty of zoning, traffic, financing, leases, etc. — we asked several community members to tell us how the Madonna Plaza/SLO Promenade property might evolve.
Some common themes:
▪ Housing, housing and more housing.
▪ Changing parking needs: Between Uber and Lyft and self-driving cars, we’ll need fewer parking spaces nearby, but strategically located drop-off points will become much more important.
▪ Focus on experiences, rather than straight retail, but remember that retail generates sales tax revenue.
▪ Include places where people can gather, like a park, a playground, and maybe an indoor farmers market.
Pierre Rademaker, founder of Pierre Rademaker Design
Mix it up and allow some residential in commercial zones. Do vertical zoning — restaurants downstairs and housing above. There’s a huge need for residential (but) retail is going to generate tax dollars.
I’d have some offices. I’d have some retail and residential, bars and restaurants — those become social gathering places — a playground and park. It could be a self-contained community.
Reduce the amount of parking. Uber and self-driving cars are going to change everything, really.
John Ewan, former City Council member and owner of Pacific Energy Co.
I suggest the owner of the Sears building (or future owners) look at the possibilities for housing. The main orientation of the building could be changed to face the street rather than the shopping center (perhaps with small shops still facing the shopping center).
Keep the shell, but open the roof in the central area and create “loft” style efficiency (studio and one-bedroom) apartments or condominiums.
An interior courtyard could be created and the existing retail space shifted into efficiency units for folks looking to downsize or enter the market. Transit, shopping, restaurants and employment are close by, making it very suitable to the same type of housing we see in our downtown — but hopefully without the premium cost we have in our downtown.
Ermina Karim, president/CEO, San Luis Obispo Chamber of Commerce
The future of retailing certainly is changing rapidly. While many big box stores are being plagued by bankruptcy and store closings, I don’t believe that bricks are going to be completely replaced by clicks. In fact, we see companies like Amazon and eyeglass retailer Warby Parker creating brick-and-mortar spaces to interact with customers. These traditional retail spaces could offer the meeting space between the digital and real world for shopping, including utilizing augmented reality for more advanced retail experiences.
These large commercial spaces are rare in our community and also offer opportunities for community to gather. The space could be re-envisioned to include more entertainment for families, such as bowling alleys, sports spaces and opportunities for physical wellness. They may feature more virtual reality and immersive experiences and bring in arts and culture. And certainly an indoor farmers market and gourmet food hall all could fit into this vision.
The retail space could also offer opportunities for business incubation, whether it is for online retailers to test out their concepts in smaller spaces or to offer office space for co-working and events.
As significant changes are expected in car technology, car sharing and potentially driverless cars, we will also have an opportunity to rethink the parking lots with more landscaping and public spaces to gather outdoors. Ultimately, these shopping centers have the ability to transform into 21st century places for community gathering.
John Fowler, president/CEO Peoples’ Self-Help Housing
We have seen these kinds of sites around the country be converted to all kinds of uses, such as housing/commercial mixed uses or even mixed housing uses. With SLO having an abundance of commercial space today and the city’s number one priority being housing, we see the large housing developments are being required to have smaller commercial components, so some type of mix housing project likely makes more sense if we are looking for other uses.
Kenneth Schwartz, former mayor, instrumental in creating Mission Plaza
This change in retail buying habits has serious ramifications not only for retailers themselves, but also for local government — especially California cities and counties following the 1978 passage of Prop 13, in that Prop 13 forced California local governments to enact retail sales taxes to compensate for the loss of property tax income. At the same time, California continues to grow in population and our economy ranks sixth or seven amongst nations, so that economy also attracts growth.
What to do? Growing economy; growing population; changing shopping habits; local governments facing loss of revenues normally derived from local sales tax. Local governments will have few alternatives to the obvious — cut services.
There is one obvious option: Stage a state-wide tax revolt as did Howard Jarvis with his Prop 13. But tossing out Prop 13 and going back is not the answer. There is no going back. “Back” no longer exists; a new tax code will have to be much different.
But this doesn’t get to your question of what to do with empty retail stores?
One thing that shouldn’t be done is to have local government buy the buildings. The business community lobbied to build these retail buildings, the local business community should be obligated to determine how they might best be used, at no cost to any form of government!
I await a dynamite idea that will not cost government a penny.
Heidi Harmon, mayor
Absolutely, a mixed-use village kind of model would be great. Restaurants and retail on the bottom, offices in the middle and residences on top. It would make the whole area more vital.
It’s an area where you could consider more height. Out there, we could go higher without negative consequences.
Michael R. Boswell, department head and professor, City & Regional Planning Department, Cal Poly
If it’s getting to the point where it can’t maintain itself as a retail hub, there’s a lot of opportunities:
▪ Housing, in both the long- and short-term — high density, apartment style. If you can put in more housing, now you have a bunch of built-in customers for the nearby retail.
▪ Campus office space — for larger companies like Mindbody.
▪ A conference center. It’s hard to do a conference in San Luis Obispo, once you hit a certain size. There’s a real sense there’s a need for a conference center and this is right off the freeway, hotels are immediately adjacent. That makes it more viable.
▪ Lifestyle/experience places — entertainment, trampoline parks. You can order all the stuff you want online, but you can’t order an experience online.
A few more ideas
More back-of-the-napkin ideas from The Tribune Editorial Board:
- First of all, we second the idea of a convention center. And housing.
- A virtual reality arcade.
- A cooking school/restaurant that showcases locally grown produce, beers and wines.
- A satellite campus for Cal Poly, Cuesta or both, possibly geared toward re-entry students who want to change careers or finish up a degree.
- A skating rink/indoor mini golf course/trampoline park/batting cages (for those who prefer actual reality to VR).
- An Amazon fulfillment center (boring, but it would supply lots of jobs, unless robots have totally taken over).
Want to join the conversation? Send your ideas to firstname.lastname@example.org.