It will be at least three years before shoppers can pick up power tools or water heaters at a Home Depot in Charlottesville, according to a company spokesperson.
Though the big box retailer bought Fashion Square Mall in September, it must go through the permitting and approval process with local government first.
“The proposal is still being sketched out,” said company spokesperson Margaret Smith. Smith said it was “still early for us to get into those details” about whether Home Depot intends to build a freestanding store or take over the old Sears storefront. Home Depot did not provide a sale price.
It was unclear what Home Depot intended to do with the mall. There was sufficient space for it to take over an empty storefront, or it could have built its own structure.
“They’re not going to tear the mall down. What Home Depot wants to do is put their store there,” said Debra Ramey, executive vice president and managing director for The Shopping Center Group. Ramey helped broker the deal between Home Depot and Fashion Square Mall.
Current tenants in Fashion Square Mall will be able to continue to operate as usual. This effectively makes Home Depot a landlord to the other stores in the mall.
“They’re probably better at [being a landlord] than most landlords, because they’ve also been a tenant,” Ramey said. “It’s not what they want to do, but they’re equipped to manage the mall.”
When it opens, the new store will be located about a mile from one of its competitors, Lowe’s. The nearest Home Depot is 30 miles away in Waynesboro.
“Our team looked at this location and saw it as strategic,” Smith said.
Home Depot has broken earnings records for the first two quarters of the 2022 fiscal year, according to press releases. But the company’s purchase of the mall comes at an odd time as the Federal Reserve is expected to increase interest rates and nearly 2,000 stores have closed in 2022 so far, according to a CNBC report.
Despite earning $150 billion in sales last year, Home Depot’s stock has dropped dramatically. It’s down 17.97%, from $411 a share in December 2021 to $274 in September 2022.
Other big retailers have started to buy up shopping malls. Malls have seen fewer people passing through their doors as consumers increasingly turned toward online shopping.
In 2020, more than 50 retailers filed for bankruptcy, according to an analysis from the international consulting firm Deloitte.
This financial turmoil means that mall owners are willing to sell for cheap. That’s especially enticing as land is at a premium.
“They’re not making more of it,” Ramey said.
Since 2016, e-commerce giant Amazon has bought and converted a number of old shopping malls into distribution centers and warehouses, according to reporting from NBC News. Between 2016 and 2019 alone, Amazon renovated about 25 shopping malls. From December 2020 to April 2021, it bought three more malls to convert.
The deal may have struck some as odd, but Ramey said that the pandemic and shifting consumer preferences have changed what’s considered typical in business.
“There is no usual anymore,” Ramey said.
Three years until opening was probably a safe bet, according to Ramey. When she started working for The Shopping Center Group, it could take as little as a year between the beginning of construction and opening a store. The COVID-19 pandemic necessitated virtual meetings between businesses and local governments.
“There isn’t the same energy through the phone. You can’t sit down and make a deal over Zoom like you can in person,” Ramey said.
Supply chain issues have made opening a store even more of a slog. Ramey also worked on getting a Burlington Coat Factory built at Rio Hill Center, which will open Nov. 11.
“Getting the materials at Burlington was the hardest part of getting that deal together,” Ramey said.
Charlottesville’s shortage of affordable housing may make it an enticing market for Home Depot. The city’s tight vacancy rate and high cost of housing—the median rent in Charlottesville for a two bedroom is $1,520—makes people more inclined to fix up their current place rather than find somewhere else to live.
The Charlottesville location will add to the retailer’s more than 2,300 stores, 50 of which are in Virginia. Lowe’s, by comparison, has 2,200 locations.
Home Depot most recently opened a store in Puerto Rico in April, according to the company’s website.
Ramey thinks having another home improvement store in the area will be a boon to the community.
“Whatever happens between the retailers and the county, I think it’s going to be a good thing for Charlottesville and Albemarle County.”