Big Box Retailers Are Acquiring Office And Retail Buildings Only To "Scrape and Redevelop" Them As Fuel Stations
Several Big Box retailers have acquired office and retail buildings with the intent to demolish the buildings and convert the sites to fuel stations
Perhaps the Class B office building market isn’t so much overbuilt as it is under-demolished.
After all one way to restore balance in a market is to remove supply.
And several Big Box retailers are contributing to this effort with an unlikely site repurpose in mind:
Fuel stations.
Retailers including Costco, Kroger, and Meijer have all recently acquired vacant or sparsely-tenanted suburban office buildings.
With the express intention to demolish the buildings and convert the sites into fueling facilities.
A survey by Market Force Information notes that Big Box retailers have a 35% share of the U.S. fuel market.
In fact Big Box retailers such as Costco, Walmart, Meijer and Kroger have fuel stations at the majority of their current stores.
Many retailers are even adding new gas stations not only adjacent to their retail stores but also at “standalone” sites a good distance away.
In 2023 Costco paid ~$6.6 MM to acquire a vacant two story, 30,000 square foot office building adjacent to its Costco Wholesale club in Springfield, VA.
But Costco had no plans to occupy or lease out the space.
Instead it plans to add a fueling station with 24 fueling positions and an 8,100-square-foot fuel canopy.
Costco's plan was well-received by Fairfax County, VA planners because it proposed to add parking, reduce congestion and reduce overall site density.
And is also a benefit to area office building owners since it takes unused office space out of the market for good.
Other Big Box retailers have also been acquiring former office buildings only to demolish them to make way for fuel stations.
Michigan-based supercenter chain Meijer closed last Fall on the $7.4 MM purchase of a ~130,000 square foot office building in Grand Rapids, MI that was previously the headquarters of the Christian Reformed Church.
But Meijer has no plans to renovate or occupy the building.
Instead Meijer plans to raze the building it so that it can move its adjacent gas station closer to the intersection.
The Christian Reformed Church had already relocated from the 70-year old building, citing its failing systems and significant ongoing maintenance burden.
Kroger is taking a different path to add a fuel station adjacent to a grocery store that it operates in Orion Township, MI.
No empty office buildings were available to purchase—so it is instead acquiring a vacant former PNC Bank to raze and develop a 16 pump fuel station.
Previous attempts by Kroger to acquire other area property for a fuel center were denied by Orion Township.
But the Township is not standing in the way of Kroger’s acquisition and redevelopment of the vacant and antiquated former PNC Bank building.
Retailers are also acquiring other types of vacant and under-utilized buildings for “scrape and redevelopment” as fuel stations.
Like the ~35,000 square foot former Bed Bath & Beyond retail building on a ~7 acre site in Mission Viejo, CA.
Costco recently acquired the property for ~$14 MM and secured approval to develop a new 40 pump fuel station at the site.
Even more interesting is that this new Costco Wholesale Fuel Station will not only be the Company’s largest fueling facility but also its only “independent” station not adjacent to an existing Costco Wholesale club.
But first it will require a demolition of the former Bed Bath & Beyond building that has been located at the site for 30 years and a redevelopment of the site into its new use.
