As vocal anti-Wal-Mart residents line up against the company’s
desire to build a new 220,000-square-foot superstore, one of the
key questions for Gilroy City Council members is
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Will Gilroy be plagued by the ’empty box’ syndrome?
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GILROY – As vocal anti-Wal-Mart residents line up against the company’s desire to build a new 220,000-square-foot superstore, one of the key questions for Gilroy City Council members is “Will Gilroy be plagued by the ’empty box’ syndrome?”
It works like this: A so-called “big-box” retailer moves to a new location or simply pulls up and exits town, leaving behind a monster tilt-up concrete building that remains empty for months or even years.
As of this month, Wal-Mart has 325 such buildings for sale or lease in 36 states, according to Sprawl-Busters, a Massachusetts-based organization that helps communities fight off big-box chain retailers.
That’s about 29 million square feet of empty space – or about the equivalent of 587 football fields laid end-to-end. Eighty percent of those stores have been on the market for a year or longer, according to the group. Thirty-six percent, or 118 stores, stopped selling merchandise four years ago or longer.
Will the same thing happen in Gilroy, where Wal-Mart wants to move from its existing store to a new regional shopping center down the next highway exit?
According to company officials and some observers in city government, it’s not likely. Wal-Mart company representatives said Thursday they’re confident they will find another tenant for the roughly 120,000 square-foot building they own on Camino Arroyo and are aggressively looking for opportunities. An entertainment center or complex of some sort could be the angle.
“We’re committed to finding a new tenant,” said Wal-Mart spokesperson Amy Hill in a telephone interview from Reno, Nev. “I frankly don’t believe we’ll have any problem. Gilroy is becoming such a regional hub that we’re very confident a new tenant will be found.”
Wal-Mart is working to move a supersized version of its current, decade-old store into the new Newman Development Corp. regional shopping center at the junction of state Highway 152 and U.S. 101.
At 220,000 square feet, the Wal-Mart Supercenter would be nearly twice as large as the existing store and would include a grocery store. The new store would neighbor two other national-scale big-box stores: a Lowe’s Home Improvement Center and a new Costco, the warehouse-style supermarket that is due to open this weekend.
Hill said what to do with old buildings is a problem not just for Wal-Mart, but for all retail, grocery and discount retailers. In this case, it’s impossible for the company to expand in its existing location, she said, but it’s in the company’s best interest to find another suitor.
“Since we own that building, it (would) basically just be sitting there and not producing revenue,” she said. “It’s in our best interest to produce an asset, not a liability.”
Hill said the new use for the old building will probably remain retail or service-oriented. She verified there is some interest in luring an entertainment-oriented tenant into the old building, but wouldn’t disclose what kind. Representatives of a large-scale movie theater chain such as AMC are reportedly talking to the company.
“There is some interest,” she said. “Right now it’s a legitimate rumor.”
In the past, Mayor Tom Springer has given mixed reviews toward the move, noting that Wal-Mart in its existing location and a new retailer at the Newman center would optimize the city’s sales-tax revenue.
But he looked on the bright side Wednesday, saying an entertainment center in the 125,000 -square-foot building could allow for a destination center for people to enjoy.
Springer speculated that a new tenant could range from anything from a movie theater to an ice rink to a children’s entertainment center such as Chuck E. Cheese or Bullwinkle’s.
“We certainly need that type of thing in Gilroy,” he said of a destination entertainment center.
Economic Development Director Bill Lindsteadt doesn’t see problems finding a new business for the old building. He said today that he has already spoken with a couple of prospects.
“I don’t see a problem filling that building in a very short period of time,” he said. “It’s located well. It shouldn’t be a problem.”
Springer has said the city would not give economic incentives to Wal-Mart as it does for entirely new retailers. The city waives some development impact fees for several years on some new stores in lieu of sales tax revenue. Under city policy, when a business moves within the city it can qualify for incentives only on new sales tax revenues it produces over and above the amount generated at their old locations, officials said.
Councilman Peter Arellano said he has some concerns about the move but remains undecided.
“Right off the top, from what I can see there’s no problem as long as they’re zoned there and we’re not giving them any money (incentives),” he said.
But Arellano said he wants to explore concerns city police and fire officials have raised over emergency access to the site, as well as regional impacts – especially to the shopping centers that house the PW Super and Arteaga’s markets.
“This is not increasing any sales tax for us,” he said. “It will give a considerable amount of pressure to two shopping centers that are barely coming back and staying alive.
“Are they going to be able to survive with a big giant over them? That’s my question and concerns.”
Councilman Charlie Morales had concerns about traffic as well as union questions. The store’s plans have caused consternation among employees at those supermarkets, which would be the new store’s competition.
“Based on those two big issues it brings my concerns to a level of questioning,” Morales said. “If I find some comfort zone that the unions will mitigate those issues and the traffic (will be mitigated), I think we could move forward.”
Whether the company will be able to fill the building remains to be seen as well, he said, although he said so far Wal-Mart has been a good corporate citizen.
“We certainly don’t we want a big empty box there that sends a message to motorists we’re not doing too well economically,” he said.
Officials at United Food and Commercial Workers Local 428 have criticized the store’s plans, noting they will merely divert existing sales tax and jobs while offering inferior employee benefits. Wal-Mart does not use unionized labor.
Hill said the company pays competitive wages and offers both full and part-time employees health insurance and other benefits The new store would employ about 500 people – roughly double that of the current location – with about 70 percent expected to work full-time.
“I think their frustration over (trying) to unionize our workers has led them to do anything they can to stop our growth,” she said.
The store’s bid to move has not been a topic of discussion at the Gilroy Chamber of Commerce board of directors or its government relations committee, said Susan Valenta, the organization’s executive director.
“It hasn’t really been discussed,” she said. “It’s a business making a business decision – as a chamber, I don’t see how we would become involved in a business making a business decision.”
