June 26, 2011

What if Wal-Mart Leaves Poway?

We moved to Poway in 1976. That was 35 yrs ago. During that time there have been many grocery stores, restaurants and little shops in Poway that have come and gone.

The first grocery store we shopped at was the Alpha Beta on Poway and Pomerado Rd. It was located about where Michael's is now. Back in those days, we almost never ran to the store without running into someone we knew. I think I spent as much time chatting outside in front of the store as I did shopping inside.

The next grocery store I remember shopping at was the Big Bear store, which was located where the empty Dixieline is now. The store's roof leaked in the rainy season and we had to walk around buckets and pails. They were always going to move and build at Poway and Silverlake, but they never did. Big Bear moved out and sold the land they owned. Eventually a Lucky was built there.

The first Vons in Poway was located where Henry's is. Later Vons moved to their current location on Poway and Community Rd. I can still remember their grand opening. I won a $100 shopping spree. I had something like 3 minutes to fill a shopping cart and I could keep anything as long as it didn't exceed $100 total value. There were real sweet about it and let me pick out some meat ahead of time. Then I had to make a spectacle of myself and dash down the aisle and grab the meat I had picked out.

Vons built a much larger store on Poway Rd near Pomerado, where CVS and Pic N Save are. I guess the town wasn't really big enough for 2 Vons, so the bigger one was shut down.

The point is, stores open and stores close. Same with lumber stores, nurseries, restaurants, car dealerships and any number of other retail venues. What is here today might not be here tomorrow.

What will happen if Wal-Mart moves out? Let me rephrase that. What will happen when Wal-Mart moves out? Wal-Mart is the biggest store in dowtown Poway. The Wal-Mart expansion is going to add about another big grocery store's worth of square footage to the current Wal-Mart. That will be one h-u-u-u-u-g-e store. What could possible move into that much space in downtown Poway?

It's not unlikely that Wal-Mart will move out at some time. That's just part of retailing. Wal-Mart's business practices make it even more likely that it will happen. Wal-Mart likes to saturate an area, then when the competition has moved out, they thin out their own stores. Once Wal-Mart gets a bigger toe-hold in San Diego, they could locate their stores closer to the freeways and leave the Poway store vacant.

And when they do move out, what will happen to the old store? Poway's Wal-Mart was built in 1992. Just before it was built, K-Mart closed. It took 2 years to get that building leased. And even then, the building had to be divided into smaller stores to get tenants. The current Wal-Mart is much larger than the old K-Mart, and the expanded Wal-Mart will be even larger. It could be a real problem getting it leased if Wal-Mart closes the Poway store.

According to Sprawl Busters, Wal-Mart had about 350- 400 "dark stores" in 41 states for sale or lease in 2005. That is up from 333 empty stores in 31 states in 1999. I do not have exact current figures, but Wal-Mart lists 103 sites for lease and 40 vacant building and 623 properties for sale on Walmart Realty. The 623 properties are land in a planned or current Wal-mart shopping center. Wonder which one they are pushing more, land sales next to future Wal-Marts are old vacant buildings?

Sometimes Wal-Mart will build a bigger store very close to another Wal-Mart in a town. When the old store closes, Wal-Mart may have ownership or leaseholder rights to prevent a competitor from moving in. Many Wal-Marts sit empty, attractive only to vagrants and vandals.

What can Poway do to prevent Wal-Mart from leaving a blighted big-box store in the center of town? One thing would be for Poway to adopt a store cap size. Our community is better off with buildings that are sized right for Poway, and can be leased when a tenant leaves.

Even if we missed the chance for a store size cap, Poway can take some steps (from newrules.org) to prevent getting stuck with a "dark store". Poway could
1) Require developers to post a demolition bond that can be used by the city to demolish the structure and maintain the site should the store become vacant.
2) Adopt a dark store ordinance that mandates that property owners market empty buildings as soon as they become vacant and voids any clauses in the retailer's lease that constrains the owner from leasing the property to another retailer.
The Poway Wal-Mart site is owned by Wal-Mart, but the ordinance should be crafted to cover any leased or owned big box store that may become vacant. Because large corporations have their own teams of self-serving lawyers, great care should be taken to make sure the ordinance is clear, specific and enforceable.

Davenport, Iowa had a dark-store agreement. Wal-Mart planned a larger store and vacated their original store. The agreement Davenport had with Wal-Mart required that Wal-Mart make "reasonable best efforts" to sell the store. Whatever that means. And Wal-Mart could reject offers that were below "book value " for it. Guess who determines the "book value" of the property?

Davenport staff forgot to specify in the agreement that Wal-Mart could not refuse offers that were above book value. After 2 years of no sales, the city has the option to buy the property or find another buyer. And the cost of demolishing the building, if necessary, would be paid by the new owner, not Wal-Mart.

Poway needs a dark store ordinance if they allow big box stores in the downtown area. And they need to make sure their ordinance is written better than the one Wal-Mart snookered Davenport with.

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