Image Courtesy of Walmart
Walmart acquired two Pennsylvania shopping centers -- Monroeville Mall and Bethel Park Shopping Center -- earlier this year and just revealed plans to turn the Monroeville location into a mixed-use development featuring retail, dining and entertainment space.
A New York Times article covering the pending Monroeville Mall demolition said Walmart’s plans appear to mark its first move into a real estate strategy first detailed in 2018.
“Walmart owns most of its store sites, but its new purchase makes it a landlord to other merchants, too,” according to the Times. “If the Monroeville project goes well, it could serve as a template for a new way for Walmart and other large players to grow.”
In 2018, L.B. Johnson, VP of construction at Walmart, in an ICSC keynote speech discussed plans for a “Town Center” concept that would see Walmart redeveloping parking lots, empty fields, and other space adjacent to its stores into community spaces that include local restaurants, fitness centers, and health clinics -- as well as well as potentially room for movie theaters and activities such as golf driving ranges, ice rinks, and bowling alleys.
“We want to provide community space, areas for the community to dwell,” said Johnson at the time, according to Forbes.
Walmart in January purchased the Monroeville Mall, where George Romero filmed the 1978 zombie-horror film “Dawn of the Dead,” for $34 million and recently applied for a $7.5 million state grant to “transform the space into a modern, mixed-use destination that strengthens the regional economy.”
The redevelopment will include a Walmart, Sam’s Club as well as other new retailers, restaurants and entertainment spaces, as well as a public open space for community use. The mall currently doesn’t have any Walmart banners.
Walmart's Push To Diversify its Footprint
Veronica Miniello, an associate director of market analytics for CoStar, told CoStar News that Walmart’s purchase of malls helps diversify its retail strategy and gain entry “into denser areas that are typically not suited for its large Supercenter format.”
A JLL report from last year noted that a number of luxury brands, in recent years, have been acquiring the buildings that house their stores in New York City, San Francisco, and Beverly Hills in order to lock in prime locations amid low availability rates -- and avoid future rent hikes.
Dillard’s, in August, partnered with a developer to acquire Texas’ Longview Mall, where it’s a tenant, for $34 million in order to help revive the shopping center and prevent it from being acquired by neglectful owners. Chris Johnson, Dillard’s co-CFO, told the Wall Street Journal at the time, “There are some bad actors out there in the mall industry that have been buying malls… Every mall they own deteriorates.”
Home Depot and Publix have likewise bought shopping centers and malls, in some cases, to secure retail space.
In May, Walmart acquired Bethel Park Shopping Center, where it currently has a Walmart store, for $39.6 million, although it has no plans for a major redevelopment. A Walmart spokesman told Pittsburgh’s Action News 4, “Walmart wants to continue to operate in Bethel Park and purchasing the store provided the best opportunity to continue serving our customers in the long-term.”