JC Reindl

Detroit Free Press

A line of shoppers stretched down a block of Woodward Avenue in Detroit last week during the opening of the city's long-awaited Nike store. Excitement and a palpable sense that downtown retail was turning a corner filled the air. "They are bringing Detroit back!," said lifelong resident Michael Miller, 38, waiting to enter the crowded sporting goods store. "It used to be like this way before I was born."

But even as Detroit's downtown sees more high-profile business openings and planned launches, a noticeable number of still-empty storefronts occupy prime locations up and down Woodward. These vacancies underscore the difficulty of filling retail spaces in the city's numerous older buildings, a particular challenge in this era of online shopping, when many retailers need fewer stores and less actual space than they once did.

Many of the buildings along Woodward have deep, spacious storefronts that worked well for displaying and storing merchandise, but they're less appealing in today's retail environment where tenants often prefer highly visible storefronts coupled with smaller interior footprints.

Coincidentally, the new Nike store is just across Woodward from the former site of the iconic J.L Hudson department store, once the second-largest department store in the world. Hudson's closure in 1983 delivered a devastating blow from which downtown Detroit has yet to fully recover. The land now houses an underground parking garage, although businessman Dan Gilbert plans to build a skyscraper that would include space for commercial tenants and residential apartments.

"You can point to the closing of Hudson's as the beginning of the end," said Paul Wasserman, owner of Henry The Hatter, 1307 Broadway, a retailer that dates to 1893 and has seen a slight uptick in business along with the recent increase in downtown foot traffic. "There was one point in the mid- to late-'80s when we were the only tenant open on this block. It doesn't get much lower than that, unless we had to close too."

Will all of downtown's empty storefronts ever be filled? For some retail experts and merchants, the answer is a probable yes — given enough time and a continuation of the ongoing boom in new market-rate apartments that is expanding downtown's population and market demand for services.

But these storefronts won't necessarily find the same uses that they did years ago. Expect to continue seeing new food and beverage places, more "pop-up" stores and businesses that focus on offering unique experiences and making customer "impressions" as much as cash register transactions.

A major change in shopping habits that undoubtedly affects Detroit is that people are spending more time on food and beverage consumption and less on actual shopping during their trips to traditional shopping destinations.

Ken Nisch, a retail design and branding expert at Southfield-based JGA consultants, said nearly 25% of leasable space in malls these days is food and beverage spots, up from 7% or 8% in the past. Shoppers today might visit three stores and go have lunch, rather than hitting seven different stores as they might have done before the explosion of online shopping, he said, adding that the trend applies to downtowns too.

Nisch doesn't believe that online shopping will kill off in-store shopping. Brands still want actual stores in Detroit and elsewhere to showcase merchandise and create positive impressions for consumers, who might later visit their websites. "What people are looking for these days is customer acquisition, not just transactions," he said.

He also anticipates more pop-up stores in downtown Detroit going in with short-term leases and around events, such as this weekend's Movement techno festival or the North American International Auto Show in January.

Detroit is already having a renaissance of new restaurants and bars. These businesses fill up space, and some have opened in once-vacant buildings such as the Grand Army of the Republic Building on Grand River (home to Republic restaurant). Future but not-yet-open downtown restaurants include Shake Shack, Wahlburgers, and a possible sushi spot on the ground floor of the former Federal Reserve building.

"In the past 24 months the food and beverage scene has really taken off," said Kees Janeway, a retail real estate consultant and broker. "and that's because it's not purely dependent on the local population. These are people who come in for work, people who come in for games."

However, downtown's local population is growing. Janeway expects more retail stores to arrive once the hundreds of apartments that are currently under construction in and around downtown open up and get filled with residents, many likely to be young professionals with spending power. Current rent levels in new or redone downtown buildings can exceed $1,200 a month for a one-bedroom unit — not including parking costs or Detroit's notoriously high car insurance rates.

"If that residential real estate gets gobbled up as quickly as the stuff that is being gobbled up right now, I think there's a serious tide coming in for Detroit," he said. "And with that will follow more retail."

Several of the empty storefronts along Woodward are owned or controlled by Gilbert's Bedrock Detroit real estate firm. This includes vacant storefronts on the Nike store's block and the red brick building with a clock at 1400 Woodward — also across from the Hudson's site — that housed a wig shop before it was bought in late 2013.

Bedrock, which has more than 80 buildings across downtown, is known for its deliberative approach to leasing out space, especially for key locations.

Most of downtown's newest and most popular storefronts are in Bedrock buildings, including Punch Bowl Social, the Townhouse Detroit restaurant, Roasting Plant coffee, the John Varvatos store and the Nike store. And apparel company Kit & Ace is to open a store next month a block north of Nike and close its smaller, temporary location in Midtown.

“Our plan has always been to be very, very methodical when we merchandise retail,” Dan Mullen, Bedrock’s executive vice president, told the Free Press last week. “We want to make sure we have great co-tenancies, brands that fit next to each other nicely.”

Another one of the reasons why some non-Bedrock storefronts on Woodward remain empty is that landlords haven't seen interest yet from the sort of top-flight tenants that would compel them to do expensive and necessary renovations, real estate experts said.

Retail rents are less standardized than office-space rents, although market insiders say that both rates are on the rise in downtown. Leasing deals for quality retail space cost roughly $25 per square foot and include a small building improvement allowance. Food tenants or those seeking space around Campus Martius, however, will generally need to pay more.

The scheduled completion next year of the QLINE, the 3.3-mile streetcar line that will run along Woodward from downtown to New Center, is widely expected to boost the commercial prospects for surrounding real estate. The inconvenience around the rail line's construction may have caused some delay in getting those storefronts filled.

"About the time that the rail line opens, you'll see a lot more storefronts," said Jim Bieri, a Detroit-based retail consultant with Stokas Bieri Real Estate. "You've gotta be a little patient."

Cassie Radstaak, 33, is eager and ready for more Detroit stores. She and her husband moved to the city from Toronto in January. While waiting in line last week for the new Nike store, she expressed hope that its successful opening could entice more retailers to give downtown a chance.

"I think that's the biggest piece of the puzzle that's missing at the moment," Radstaak said.

Contact JC Reindl: 313-222-6631 or jcreindl@freepress.com. Follow him on Twitter@JCReindl.

Why some Woodward Avenue storefronts remain empty: