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Building vacancies; How a Walgreens in Kenmore started a game of musical chairs, becoming an example of how real estate updgrades can trigger a cascade of abandoned space

When Walgreens opened a pharmacy at 3170 Delaware Ave. in Kenmore, in 1998, the move started a chain reaction of business openings and vacancies that continues to ripple through the village and the Town of Tonawanda.

Beyond Walgreens, the players include Dollar General, the high-end men's clothing store Napoli's, a hot-dog joint, a comic-book shop and a wedding planner, and their movements involve at least half a dozen building sites.

Call it the Great Kenmore Business Shuffle, but it's just one example of a shifting around of retail stores that regularly takes place throughout the region.

"I can tell you, people aren't too crazy about that musical chairs," said Melissa Foster, president and founder of the Kenmore Village Improvement Society.

Retailers and chains look for a new site because they want room for a larger store or restaurant, they want a corner location or more parking. In a growing economy, vacancies are quickly taken up by new businesses, but amid Western New York's slow-growth model, vacant buildings can linger, creating a form of blight.

And in some cases, such moves are aided by tax breaks granted by local industrial development agencies.

Walmart, Rite Aid and Mighty Taco are among the chains that have moved to new locations only a few miles, or just down the street, from a current store or restaurant.

"Any time you end up with a vacancy, there's no way you can look at it as a positive thing," said James J. Allen, executive director of the Amherst Industrial Development Agency. "It's a real issue."

But store representatives and real estate developers say the community benefits when a business opens a new, larger store with better selection, more employees and a higher assessment.

"You're adding to the tax base," said developer Carl P. Paladino.

The same pattern unfolds with some manufacturers, restaurants and the offices of doctors and other professionals. But the big shifts primarily involve pharmacies, discount and big-box stores and other retailers.

Developers, commercial real estate brokers and planners say this is just how the marketplace works, with one comparing a retailer's desire for a better store to a home buyer's moving up from a starter house.

"Is it good for the economy? I think it's evolution," said Penny Cipolla, the president of Innovative Realty Services. "You bought a house, you have a family, you buy a bigger house."

>The ripple effect

In general, retailers move to a new site because they want a bigger store, or a store with the chain's new design, or they want a better location at a corner with access from both streets and more room for a drive-through and parking.

But there are ripple effects for the community, as the Kenmore situation shows.

The original Walgreens at 3170 Delaware, at West Girard Boulevard, opened in November 1998. The store was "a real sore spot for a long time" with neighbors, Foster recalled.

Then in 2007, Walgreens opened a new, slightly larger store about a mile away at 2739 Delaware at Kenmore Avenue. Foster praised the newer store as blending better into the neighborhood.

"We believe that the new store location is a better location. It's a corner location -- it's more visible," said Robert Elfinger, a Walgreens spokesman.

The new store is assessed at $4 million, while the old store has an assessment of $660,426. Walgreens leases the new store from Benderson Development Co., which bought and tore down several buildings at the site to make way for the store.

Napoli's, which had operated a store at the corner since 1980, already had opened a new store on Transit Road in East Amherst and happily sold out to Benderson in 2005, said Tony Napoli, who owns the shop with his brother, Joseph.

"The demographics were changing. We were aware of that," he said. "We were approached to sell. We just felt it was a good time to sell."

A barber, a comic-book shop, a bar and a Louie's Texas Red Hots were also located in a building on the site.

Louie's didn't want to move, but relocated in 2000 to a building about a mile away at 2350 Delaware Ave., at Hertel Avenue.

"We were doing good business there," said Louie Galanes, the chain's founder.

Eric Recoon, vice president of leasing and development at Benderson, said the community got a double benefit from Walgreens' move out of its original Delaware Avenue location. Walgreens built two replacement drug stores: one to the south at Delaware and Kenmore and a second to the north at 3564 Delaware, at Sheridan Drive in the Town of Tonawanda.

"They ended up doubling their employees, doubling their tax base," Recoon said.

The old Walgreens at Delaware and West Girard sat vacant from August 2007 until the end of last year, when Dollar General moved into the building and closed a store a half mile away, at 2890 Delaware Ave. at Lincoln Boulevard.

This left Jim Ronan and his partners, the owners of 2890 Delaware, with a vacancy in a building he said is too small for big retailers and too big for small retailers.

Ronan, who has made extensive renovations to the building, said he is subdividing the 6,000-square-foot first floor and has found a new tenant, the Wedding Agent, which will open May 1.

The Wedding Agent, though, is moving from a smaller store in another Town of Tonawanda building, 3757 Delaware, across from Mount St. Mary Academy. "It will be vacant, at least temporarily," said David Fiebelkorn, manager of Castle Realty II, owner of 3757 Delaware.

There are numerous other examples of the business shuffle, including the move of just several hundred feet of a Rite Aid in the Town of Tonawanda.

Rite Aid moved in February 2011 from a roughly 8,000-square foot store at 2025 Sheridan Drive across Colvin Boulevard to a new, roughly 15,000-square-foot store, at 2047 Sheridan, the company said.

Among other features, the new store sets the pharmacy as far in the back as possible from the main entrance, leading customers to walk past more of the store's inventory, said Paladino, whose Ellicott Development owns the buildings housing the old and new Rite Aids.

"It's a better layout for drive-through, pharmacy, front end, everything," he said.

Cipolla has worked with Rite Aid for a decade to find tenants for its surplus stores between Buffalo and Syracuse.

She said the buildings left behind by the drug-store chain -- in some cases former Eckerd Pharmacy locations -- are older structures that aren't attractive to another pharmacy because of their location or store layout.

Cipolla has closed about 40 deals on these properties, bringing in Save-A-Lot food stores, Family Dollar and Dollar General stores and a seller of ethnic beauty supplies.

"It is second-generation space, often in an urban setting," Cipolla said.

>The Big Box shuffle

Three big examples of real estate shuffles are the new Walmart Supercenters built in the past few years in Amherst, Hamburg and Niagara Falls -- just short distances from three existing Walmart stores that were then closed.

The Walmart at 1540 Military Road in Niagara Falls opened in July 2009 and is assessed at $11.2 million.

At 204,000 square feet and 500 employees at its opening, the new store doubled the size and number of workers of the store it replaced, at 5555 Porter Road in the Town of Niagara, assessed at $2.5 million.

The Supercenter at 5360 Southwestern Boulevard in Hamburg opened in October 2009, just four miles from the store it replaced at 4255 McKinley Parkway, at Southwestern.

The new Hamburg Walmart is 203,710 square feet in size, or 72,000 square feet larger than the older store, and is assessed at $17.2 million, compared to the old store's assessment of $2.95 million.

The newest of the three, the Walmart Supercenter at 3290 Sheridan Drive, at North Bailey Avenue, opened in October and replaced a Walmart at 2055 Niagara Falls Blvd. (The Amherst Assessor's Office will not release its 2012 assessment roll until next month.) The Supercenter is about 30,000 square feet larger than the old Walmart, with a grocery store, and was built after a legal challenge from neighbors was defeated.

In part because of their massive size, the vacant former Walmarts, which in these three cases were owned by the company, aren't easy to fill with a new tenant, economic development officials said.

Allen of the Amherst IDA said he supports the efforts of some communities to put restrictions on new stores that make them easier to market and retrofit if they are vacated by a retailer.

A municipality can make sure the developer follows building codes and zoning laws, and can negotiate changes to a site plan that make the project aesthetically more attractive, but has little other control over what a company does, said Gary Black, Amherst's assistant planning director. "We can't say, 'Don't move, because you're going to leave a vacant building behind,' " Black said.

The former Walmarts in Amherst and Hamburg remain unsold and vacant, but the Town of Niagara Walmart sold eight weeks ago for $1.5 million to Patrick Gabriel of Hamilton, Ont., through his Niagara Building Supplies LLC. Gabriel, owner of Park's Furniture, apparently plans to put in a furniture store at the site.

>Tax breaks helping

In some cases, relocating companies receive tax breaks or other subsidies as part of a move.

The Amherst IDA, for example, granted nearly $500,000 in tax breaks last July for Premier Wine & Spirits' move from the Town of Tonawanda to its new home at 3900 Maple Road.

IDA officials at the time said the tax breaks were needed to aid the redevelopment of a vacant brownfield site.

However, environmental activists criticize the use of subsidies to encourage the shuffling of businesses from one community to another.

"It's not something the government should be involved in," said Sam Magavern, co-director of the Partnership for the Public Good in Buffalo.

With Premier leaving, residents worried how long the large liquor store building would remain empty, although Len-Co Lumber bought the property at 3445 Delaware Ave. for $2.95 million.

One nearby liquor store is moving to capitalize on Premier's departure.

Mark Butler, the owner of Butler Liquors in the Sheridan Plaza, off Delaware Road, said he had thought for some time about expanding, but Premier's move to Amherst convinced him the timing was right.

He moved last week into a space that doubles the size of his old store in the same plaza, spending about $250,000 on the new space and the move.

And, since word of Premier's move came out, Butler said, his business has improved as people have come into his store saying they'll never shop at Premier again. "The people of Ken-Ton, Kenmore-Tonawanda, they are very loyal people," he said. "They felt abandoned."