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Thinking outside the empty ‘big box’
Companies get creative to transform buildings in wake of retail vacancies

The exterior of the Harrison office building, which used to be a Michaels craft store.When Harrison Medical Center wanted to relocate its support services such as human resources and payroll from its cramped Bremerton campus, the organization made an unusual choice. Instead of breaking ground on new construction or leasing existing office space, the hospital system redesigned a building formerly used as a go-cart track and Michael’s craft store. 

With an investment of $3.6 million, Harrison revamped the former big-box store to create private conference rooms and open workstations, and enclose a storage supply warehouse in back.

“We got the space faster than if we had built it ourselves, we were able to use an existing building in town and it met our needs really well,” said Jim Alvarez, executive director of support services for Harrison. “There’s also social responsibility. If you can use a (big-box site) in a new way, you should try.”

As large retailers have gone bankrupt or moved out, once bustling shopping areas have been left with outsized spaces to fill. And with some Wall Street analysts pointing to the demise of mega-size stores, most won’t be refilled with large retailers anytime soon. In fact, companies such as Walmart, Best Buy and Target plan to build several smaller-format stores across the country to supplement the larger selection they sell online, according to The Shopping Center Group.

Retail sites remain unfilled across the Kitsap Peninsula, but ideas that range from Harrison Medical Center (consolidated offices) to North Kitsap Fishline (nonprofit food bank) to Gig Harbor’s Seven Seas Brewing (production and retail in a former grocery store) have helped rejuvenate some big-box locations that could have become eyesores.

Remodel to focus on company workflow

To relocate nearly all of its administrative support services, Harrison looked at a number of sites, including the former Kmart building on the east side of Wheaton Way, to find a site that would work for employees and the organization’s needs.

Alvarez said Harrison chose the former Kart Trax Formula Racing facility on Wheaton Way in East Bremerton because the property owner offered a good lease rate to make the location work. Harrison leases 42,000 square feet but pays for only 22,000 of it at $7.70 per square foot, including maintenance fees. The space was repurposed from an expansive retail floor to 158 workstations, private meeting rooms, and a supply warehouse with a loading dock. Harrison spent $86.67 per square foot to update, repair and reconfigure the space.

Harrison Medical Center reconfigured a large vacant building on Wheaton Way in Bremerton that had been retail space into offices for its support services staff.Alvarez advises that companies considering a reuse of a retail or big-box site focus on the work flow as much as the design.

“You have to look at how people will use the space, not just how many cubicles will fit in there,” said Alvarez.

Also consider that safety may be a concern for some employees in a location with empty buildings. In the beginning, there was unease about the neighborhood and whether it was safe, Alvarez said. Harrison installed cameras on the building, and there have been no problems so far, he said.

And, as with many renovations, sometimes the unexpected happens. After completion in 2012, Harrison had to do some revamping after people moved in and started using the space. An additional $800,000 was spent to rework some of the office flow. Fortunately, senior leadership was supportive of making changes, he said.

Overall, Alvarez is pleased with the redesign of the former retail site as office and warehouse space.

“It went really well,” he said.

Unused space helps plan future growth

In May, North Kitsap Fishline moved from its smaller downtown location in Poulsbo to a 5,500-square-foot building on Liberty Lane, which was once the site of Poulsbo RV.

To redesign the open showroom floor plan, volunteers and businesses provided “sweat equity” and Fishline invested $70,000 to create a grocery store set-up for its food bank users, built offices for its administrative staff, and developed private conference rooms for meetings with clients. With the tall ceilings and expansive space, lights were hung from the ceiling to generate more intimacy and banks of refrigerator coolers were used as walls to break up the large space, said Mary Nader, executive director of North Kitsap Fishline.

On 1.7 acres, the building and land can provide room for growth in the future, Nader said. One idea is to extend services for client enrichment. Classes, coaching, resource rooms, and gardening instruction could be offered in addition to emergency services. In addition, guest agencies could use spare rooms at the site for workshops or meetings to introduce critical support services to Fishline clients. Nader is excited about re-imagining the use of the property and expanding services in new ways.

“We’re like kids. We’ve never had this chance before,” she said.

Prior to moving, Fishline looked for a new building for five years. The organization grew out of its previous location of 3,100 square feet as demand continually increased for its services. The nonprofit had a list of “must-haves” for the new site including affordable price, proximity to the city’s core, room to grow, and an ability to create confidentiality for private meetings with clients.

Fishline liked the former Poulsbo RV site the most, but after years of vacancy, the property had turned into a distressed one, noted Nader. The owner made improvements and Fishline purchased the building for $900,000. The organization has no plans for the older property in downtown Poulsbo, which Fishline still owns, but it could decide to sell that building to help pay off the mortgage of the new property, Nader said.

While more changes may be coming in the future, Nader wanted to keep some of the design of the former Poulsbo RV building intact. For now, the old RV mural on the wall will remain as a tribute to its former retail history.

New vision for repurposed offices

To keep costs down for redevelopment of the former go-kart space, Harrison worked with Rice Fergus Miller, a Bremerton architecture firm that specializes in revamping former retail sites into office space. In addition to Harrison’s location on Wheaton Way, Rice Fergus Miller has redesigned a former Good Guys electronics store in Silverdale for The Doctors Clinic corporate offices, revamped a former 36,000-square-foot big-box for the King County Housing Authority office in Tukwila, and reclaimed a former 25,000-square-foot Sears automotive center for its own corporate office and studio in downtown Bremerton.

“Lots of these types of buildings can be repurposed for office space, special purpose housing, and outpatient medical uses. They are well-built and already have water, power and parking,” said Mike Miller, senior principal for Rice Fergus Miller.

Miller estimates the cost to redesign and rebuild is similar to new construction. Imagination is really the key to renewing a formerly plain retail site. For the Doctors Clinic, the architecture firm designed holes in the walls to bring in natural light, added skylights and created “acoustic lighting clouds” to add intimacy to the space. In the case of Harrison’s location on Wheaton Way, the firm created common-use areas, added lighting and visual variation with different heights.

“(The spaces) have to be comfortable and pleasing with good lighting and places to congregate,” Miller said.

For Rice Fergus Miller’s headquarters in Bremerton, the firm focused on making the former automotive center highly energy-efficient, too. It uses 70 percent less energy than a typical office building, saving one mortgage payment a year in energy costs, Miller said. The renovation cost $105 per square foot.

Why is it important to reuse a large retail or big-box building?

“It’s part of history and the building stock. If an empty building can be made useful, that’s a good thing,” said Miller.

Recreating a vital city core

With more retail vacancies on main corridors and in city centers, rethinking empty locations is also on the minds of realtors, economic development leaders and government officials.

An informal group of local commercial realtors and brokers, which calls itself Kitsap Commercial Investment Brokers, meets once a month to review and discuss vacancies across the county. One of the topics of discussion is about re-imagining different uses for empty properties to encourage investment, attract new tenants and enhance economic vitality, said John Powers, executive director of the Kitsap Economic Development Alliance,  who attends the broker group’s meetings.

Ideas have included rezoning commercial property to light industrial manufacturing and opening retail spaces for part-time public use such as farmers markets. Powers said there could also be an opportunity to tap into Kitsap’s growing population of over 70-year-olds. He considers them a “retirement class” because they are more financially healthy than previous generations. To meet future population growth of the over-70 set, a big-box retail store could be converted to senior housing with an activity center and health services, he said.

 “We need to be flexible and think creatively about old retail,” Powers said.

Although vacancy rates are improving for retail and office space in Kitsap, the needle has moved only slightly. (Retail and office vacancy rates are combined as some office space is used as retail.) In February 2014, overall vacancies for retail and office stood at 15 percent, down from a peak of 17.7 percent in July 2010, according to figures compiled by Garet Gartin, Kitsap’s commercial leasing broker for Bradley Scott, Inc.

Gartin said he is experiencing the most movement in leases for retail spaces of under 1,000 square feet by start-ups and small businesses, while the larger sites remain unfilled.

Deciding what to do with large vacant spaces will help with leasing smaller ones, he said.

“If a small space is adjacent to a big empty store, it reduces interest. Property leasers are thinking ‘there is not traffic through here and my customers will have to look at an empty space.’ They have to draw a line about what will affect their customers,” Gartin said.

Gartin, also a member of the Kitsap Commercial Investment Brokers group, believes that discussing ideas for what retail and big-box sites can become can help build momentum for future uses.

“If an idea catches and sparks interest, people will talk about it outside of the (broker group),” he said. “In our industry, people are connected to people who make decisions. If it travels by word of mouth and catches a spark, then someone can jump on it and run with it.”

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