Rendering of the proposed 500 Atlantic development.

Anticipating the potential for disagreement and vitriol surrounding the potential reuse and redevelopment of the former, Kmart-anchored center at 500 Atlantic Blvd. in Neptune Beach, I felt it prudent to convey an alternative perspective. Change, particularly in this age of disruption, is something that is often an easy target of groups who, under the cover of NIMBYism (Not in My Backyard), focus only on the potentially negative and lowest-common denominator aspects. On the contrary, it is more productive when a community offers constructive criticism to yield more informed decisions and better outcomes rather than drive such processes with a zero-sum game approach.

While the economic recovery since 2009 has produced low unemployment rates and high productivity, it has also brought with it a re-thinking of real estate development that is much different than the previous boom period of the early to mid-2000s. Changing demographic preferences, particularly of millennials and “downsizing” boomers demanding mixed-use, walkable communities, a variety of housing types, resource conservation, as well as a repurposing of older buildings and assets, has provided an opportunity for citizens to re-imagine their neighborhoods and building stocks as to meet this demand.

The Beaches represents a perfect location to capitalize and embrace our success and investment synergy as an attractive community for redevelopment interests. This will require and open and honest assessment of the market and land development regulations, while recognizing that the traditional, negative perspectives surrounding mixed-use and multifamily housing options need to be laid to rest — particularly traffic, crime, noise and other misplaced externalities.

Concept/proposal of the potential use for the Kmart lot.

One of the more recurring themes of the 2017 news cycle was the death of big box retail (aka the “retail apocalypse”), especially in the wake of America’s shifting preferences to online shopping. While urban planners and real estate professionals have been lamenting the decline of the traditional shopping mall for more than a decade, industry estimates of this past year alone indicated that more than 8,600 stores could close — including many of the brand-name anchor tenants synonymous with our American capitalist heritage (i.e. Sears, Macy’s, JCPenney and Radio Shack).

By 2022, it is estimated that 1 out of every 4 malls in the U.S. could be out of business. Some have canonized this phenomenon into an art form (see Seph Lawless’s high-quality coffee table book: “Black Friday-The Collapse of the American Shopping Mall) while others do autopsy work confirming America’s evolving consumer culture and leading, global economic indicators.

The former Kmart property today.

This phenomenon can be largely attributed to a combination of three major factors:

First, the exponential growth of e-commerce: It is a fact that the impact of Amazon and other online distribution options will continue to grow and replace many shopping trips. The National Retail Federation is projecting on line product discovery and purchase growth to be five times faster than offline sales. To put into perspective, the mobile shopping share grew from 1.8 percent in the 2nd quarter of 2010 to 20 percent by the 3rd quarter of 2016! This is full-scale disruption.

Second, the existing over-supply of retail in the U.S.: In April of 2017, CoStar’s director of retail research, which is the world’s number one leading commercial real estate research firm, stated that, “There’s about a billion square feet of retail space that needs to go away, that needs to be converted, for the market to get healthy.” The U.S. leads the world in commercial square foot per capita (almost six times that of the UK) and this excess amount means that there isn’t enough demand to refill many vacant big-box centers with new big boxes.

Third, the shifting preferences of millennials from materialism to experience and authenticity: We are witnessing a growing trend in what is referred to as “eatertainment.” The under-40 crowd increasingly allocates discretionary income to food, travel and entertainment, particularly high-quality and locally sourced versus their older counterparts. This means less on “stuff” and more on experience with friends that can be shared instantaneously via social media platforms, such as Instagram. Industries are keenly aware of this fact and recognize that such activity is forcing them to modify their marketing approach.

Photo of Cityplace, a good example of infill redevelopment that could be a model for the Kmart.

These three elements are working against the traditional shopping center, especially in the wake of the demand for urban, walkable places. The process is quite predictable — the anchor tenant departs from a large center, then a ripple effect occurs where smaller, supporting retail and service providers struggle to remain and then communities are left with what the land development industry refers to as a “greyfield.”