Stein Investment Group of Atlanta has a plan for how to redo former big box stores, and it provided the city of North Olmsted a first, tentative step in efforts to reduce the suburb’s reliance on bricks-and-mortar retail.
The real estate developer is converting former big box stores to mini-warehouse operations that will operate under the Space Shop Self Storage flag, an Atlanta-based company. The company’s first target in Northeast Ohio is the former Toys R Us site in North Olmsted.
Through SIG Lorain Road LLC, Stein paid $2.4 million on Aug. 20 for the 40,000-square-foot building on 4 acres at 27408 Lorain Road. The seller was the Cianciolo and Mercurio realty trusts, located, respectively, in Fairview Park and Highland Heights, according to Cuyahoga County land records. The county assigned a market value of $3.2 million to the site for property tax purposes.
Construction workers are now at work on the site, which had been vacant since the Toys R Us chain closed in 2018.
While Stein is letting the big box stand as it cuts it up into small spaces for individuals and small businesses to rent, its plan includes putting a 4,000-square-foot building, most likely a restaurant, on part of the parking lot closest to Lorain Road.
Kimberly Lieber, North Olmsted’s director of planning and community development, said replacing the retail use with the mini-warehouse is “one more step in reducing retail vacancy on Lorain Road.”
Because of a 2017 change in the city’s zoning code, the site was zoned as mixed-use, which was designed to provide options for redevelopment of former retail sites as offices, apartments, townhouses and small percentages of service retail.
“It’s turning out as mixed-use, but not the way we expected,” Lieber said, but noted that with a lot of conversation, the developer agreed to put a small building close to Lorain Road that will help add pedestrian scale and more activity to the streetscape.
The site, as a result, will incorporate more than just one building and have modern methods of handling rainwater with open culverts and higher-quality materials as a result of the newer zoning provisions.
The suburb enacted the new alternatives for traditional retail zoning with an eye on how freestanding retail spaces could be reused as the physical retail market weakened under the onslaught of online retailing, which has gained velocity during the pandemic.
Not all freestanding stores or high-vacancy shopping centers will be altered by the provisions, she said, because the way they are implemented depends on the size of the store. For example, a vacant former Payless Shoe Source store at Lorain and Porter roads is on too small of a site to provide much opportunity.
However, others are available. A big one is at 26518 Lorain, an empty 67,000-square-foot building that formerly housed a Babies R Us store and two other retailers. The lender-owned property sits on 6 acres. That’s enough ground to accommodate several smaller buildings, depending on the next owner or user’s vision for the property.
Another opportunity may be looming at the store that Levin Furniture Co. has decided to close at 23250 Lorain Road as the Pittsburgh-based concern rejuvenates its former presence at other locations in Northeast Ohio. The 46,000-square-foot former furniture store sits on a 4-acre site that can accommodate more than 200 cars.
North Olmsted has been a retail destination since the early 1960s, but became a regional retail location after Great Northern Mall was opened in 1976.
The mall has lost one of its four anchor department stores and is in the throes of working out a default on a bond sold in Israel as the bondholders bring in a new set of operators, Pacific Retail Partners of El Segundo, Calif., and Great East Investors of New York City.
The firms will get an opportunity to buy the property if they choose to do so after creating a plan to reinvigorate it.
Lieber said the mall’s zoning remains general business and was not changed by the previous zoning update.
“That will be a new conversation,” she said. “The city will be flexible. But we did not want to force what might happen there. Instead, we wanted to work with what the market presents.”
In the meantime, much of Lorain Road is devoted to retail, ranging from former homes used as medical offices to shopping centers and auto dealerships.
CoStar, the online realty data source, reports 35 shopping centers with a total of 1.5 million square feet of selling space (not counting the mall of almost the same size) and a vacancy rate of 11%, double what it was just three years ago.
Dr. Rustom Khouri, CEO of Carnegie Management & Development Corp. real estate firm in Westlake, has constructed four major shopping centers in North Olmsted over the years and still owns three.
He said the city is taking a sensible approach given the challenges that retailers are having.
“Any time you provide flexibility in your zoning code, it is a good thing,” Khouri said. “Given today’s economy, creating mixed-use zoning is an effective way to reposition your high-profile real estate to provide a more optimum response to what the market needs.”
As far as the Atlanta developer’s project goes with Space Shop, it will be bringing a new mini-warehouse operator to the region.
Space Shop has 86 locations, with one in operation in Columbus and the others in Georgia, North Carolina, South Carolina and Virgina, according to its website.
Lieber noted one other advantage to Stein’s plan.
“Seeing this project going forward,” during the pandemic and its accompanying recession, she said, “shows we will get past this moment in time.”
Stein did not return two phone calls and two emails by publication deadline.