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Wal-Mart Marches Into Retail Breach

Fitness centers helped pump up shopping centers across Orange County during the past year, taking over empty space left behind by shuttered big-box retailers including Mervyns and Circuit City.

Now Wal-Mart Stores Inc. wants to pump up sagging OC retail sites, with more than 400,000 square feet of space of new stores recently opened or expected to open next year.

The Bentonville, Ark.-based megaretailer is behind a sizable chunk of the looming new retail space locally. Oklahoma City-based arts-and-crafts chain Hobby Lobby also has added significant space during the past year.

Huntington Beach figured in several openings this year, including a Walmart Neighborhood Market. The city also added a 65,000-square-foot Hobby Lobby and a 47,948-square-foot Dick’s Sporting Goods, while its Bella Terra shopping center gained a 154,000-square-foot Costco. 

More than 900,000 square feet of retail space—both new development and vacant space redeveloped for new tenants—will be added to OC’s market in 2012, according to a recent report from the local office of Marcus & Millichap Real Estate Investment Services.

OC’s retail market totals about 95 million square feet, much of it anchored by big-box stores. A survey of local brokerages put vacancy rates for the county’s retail market at about 7%, with rents largely flat from a year ago, at about $1.85 per square foot.

Space Reuse

Just as gym operators like Irvine’s LA Fitness International Inc. have done for the past 18 months or so, Wal-Mart now is doing its part to prop up occupancy rates in the area by taking over space left behind by other retailers.

In addition to expanding its base of megastores, Wal-Mart—which expects to see 2012 sales of more than $440 billion—has begun a big push for its Walmart Neighborhood Market concept.

The company’s first neighborhood market for OC, a 31,000-square-foot store located in Huntington Beach, opened in July and took over a former Rite Aid location that had been vacant for two years.

Three more neighborhood market stores should open by year’s end on OC property owned by Wal-Mart or other landlords. The company is on the lookout for other similarly sized locations for a rapid expansion of the concept throughout the county.

Wal-Mart’s neighborhood market stores run about 35,000 square feet, about 70% smaller than the company’s typical supercenter.

The company says its store format is designed to provide quick and convenient shopping for groceries, pharmacy items and general merchandise. Stores typically also include delis and bakeries.

Offerings also seek to reflect their locations. So the Huntington Beach location counts beach toys, boogie boards and general surfing merchandise, and a 28,000-square-foot location in Anaheim that opened in September offers a large number of Hispanic items aimed at its customer base.

The Anaheim location replaces a Hahm Motorsports location that reportedly closed about three years ago.

Other new area Walmart supermarkets include a store opening this month in Garden Grove and another in Rancho Santa Margarita.

Wal-Mart operates more than 200 of supermarkets across the country. The Huntington Beach location was its fourth on the West Coast.

Superstores

Along with the smaller neighborhood centers, Wal-Mart has been adding to its traditional base of larger stores across the county.

In Irvine’s Von Karman Plaza, a 208,200-square-foot center located along Barranca Parkway near The District at Tustin Legacy, work is moving ahead to put up a nearly 118,000-square-foot Walmart. The chain plans other superstore openings in Huntington Beach and La Habra in coming months.

The Von Karman store is slated to open early next year, replacing a shuttered Sam’s Club as the Von Karman Plaza’s anchor tenant.

The property is owned by Portland, Ore.-based Harsch Investment Properties, which paid a reported $35 million for the center in 2004, according to CoStar Group Inc. records.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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