ALBUQUERQUE, N.M. — The past year has been brutal for many brick-and-mortar retailers.
According to the Bureau of Labor Statistics, employment in the retail trade has declined by 89,000 jobs since a recent high in October of 2016. In March 2017 alone, 30,000 retail jobs were lost nationwide.
Albuquerque has shared in the pain, with national retailers like Macy’s, Sears, JC Penny, Sports Authority and Gordmans closing or scaling back their presence here, along with the shuttering of some longtime mom-and-pop stores.
What that means going forward depends on whom you ask. At a minimum, landlords are rethinking the types of retail that might work for a particular location. But in some cases, industry insiders say, it’s time to consider entirely different uses.
Albuquerque developer Scott Throckmorton, whose company recently built the new Lovelace Medical Group clinic at Jefferson and Osuna NE, said new kinds of users could bring more foot traffic to local malls. Some may be ripe for medical and educational uses, a grocery store, a climbing gym, call center operations, government clients, even apartments. Value retailers, like the dollar stores, are also good candidates to fill space.
But he added it may be too late to fix some of Albuquerque’s retail white elephants. “You can’t assume that because it’s a mall or strip center, it always has to be that development type,” said Throckmorton. “Sometimes, it’s not a case of a retail market being overbuilt, but one that is underdemolished.”
At least part of the problem has been pegged to the rise of e-commerce. According to the U.S. Commerce Department, online retail sales made up 11.7 percent of total retail sales nationally last year, but that is up from roughly 6.7 percent in 2012. Online retail also represented 42 percent of total retail growth in 2016.
But even with that growth and the well-documented retail troubles of the past year, some say it’s way too soon to declare physical retail dead.
“In that context, online is seeing huge growth but still a comparatively small piece of the whole pie. Retailers can’t ignore it, but bricks-and-mortar aren’t going anywhere anytime soon,” said Ben Perich, a senior commercial broker at Collier’s International.
In Albuquerque, CBRE New Mexico crunches data for a dozen submarkets and six development types, with categories ranging from strip centers, power centers and super-regional centers. Car dealers and freestanding movie theaters and restaurants are excluded from the market stats compiled by researchers.
Despite a few success stories such as the arrival of a grocery store, Downtown Albuquerque is the laggard, with 24 percent of its half-million square feet of retail space vacant as of the fourth quarter of 2016. The Uptown area is close behind with 23.8 percent of its 2.6 million retail space vacant as of the fourth quarter.
Looking at the metro region’s universe of 26 million square feet of retail space, the average vacancy rate stands at…