These Ugly Big Box Stores are Literally Bankrupting Cities

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The “Big Box” Burden on Cities

  • Infrastructure Costs vs. Tax Revenue: Big box stores are usually built on the edge of cities (greenfield locations), requiring massive amounts of new infrastructure (roads, sewage, pipes) to support them.

    • The Math: Urban3’s research in Asheville, NC, found that a mixed-use downtown building generates nearly 100 times more property tax revenue per acre than a suburban Walmart.

    • Net Loss: A study in Ohio estimated that a store like Walmart produced a net annual loss of $0.44 per square foot for the city. For a small 50,000 sq ft store, that’s a loss of over $20,000 a year.

  • The “Dark Store Theory”: Retailers like Lowe’s, Target, and Costco use legal loopholes to lower their property taxes. They argue their buildings are so specific and cheaply made that they are functionally “worthless” if the specific retailer leaves, so they should be assessed as vacant (“dark”) properties even while operating.

Destruction of Local Economies

  • Wealth Extraction: When you spend $100 at a local business, $48 stays in the community. At a big box store, only $14 stays.

    • Reason: Local businesses use local accountants, banks, and suppliers. Big box stores send revenue immediately to corporate HQs (e.g., Bentonville, Arkansas) and use centralized services.

  • Job Destruction: Five years after a Walmart enters a county, total employment falls by about 3%. They destroy more local jobs than they create.

  • The SNAP Cycle: Walmart pays employees so little that many qualify for food stamps (SNAP). Walmart then captures over 25% of all SNAP dollars spent, effectively profiting from the government subsidies required to support their own underpaid workforce.

Why Cities Do It (The Ponzi Scheme)

  • Short-Term Gain: Cash-strapped cities approve these developments for the immediate injection of sales tax revenue and “growth” stats to pay off debts from previous infrastructure projects.

  • Long-Term Liability: The maintenance costs for the new roads and pipes don’t hit the city budget for decades. By then, the big box store (built to last only ~15 years) may have already closed, leaving the city with the bill and a vacant building.

The European “Hypermarket” Comparison

  • Regulation: European countries often ban “loss leaders” (selling below cost to kill competition) and have strict laws about where hypermarkets can be built.

  • Walmart in Germany: Walmart failed in Germany because it couldn’t exploit labor (unions are strong), couldn’t use predatory pricing, and the culture rejected the “creepy” forced smiling and chanting.

  • Shopping Culture: Europeans generally prefer walkable city centers with specialty shops over driving to a one-stop box on the outskirts.

Proposed Solutions

  • Import Replacement: Cities should prioritize businesses that keep money circulating locally.

  • End Subsidies: Stop giving an estimated $65 billion annually in subsidies to attract big box retailers.

  • Revitalize Downtowns: Focus spending on maintaining dense, walkable areas that are financially productive rather than subsidizing suburban sprawl.

There was a little Mexican restaurant in a town where I used to live, and they’d had “since [year]” on their sign since they opened. (I think it was something like 2010.) People thought it was funny that they were proud of NOT being an old establishment, but the owners said they put it there because it would look really impressive when they were still operating in 2050. They opened up with the intention of being a long-term feature of the community. I always thought that was very cool of them.

When I was a kid the town I grew up in had a historic Main Street with dozens of shops where you could get almost anything. There were no suburbs, chain stores, box stores, etc. In 2000 the city approved construction of a Hitchcocks and the town’s first subdivision right next to it. The grocery stores, bakeries and butcher shops were all abandoned within the next 3 years. In 2005 a Lowes was built and more subdivisions followed. Every hardware and electronics store was abandoned.

The final nail in the coffin for Main Street was a WalMart built just outside the city limit, and what was left of the small shops were abandoned by 2010. The Main Street that had been a bustling, small and historically significant part of town for almost 200 years is now almost completely abandoned, and the beautiful victorian-era houses surrounding it were demolished to make way for housing developments. It’s sad to see the town you grew up in fall apart and replaced with massive eyesore box chains and endless rows of cheaply constructed cookie cutter houses.

I really fear that in Europe we are making a similar mistake with shopping malls in city centers. Many small towns will heavily subsidize the creation of a shopping mall to generate tax revenue, and in the process they make the actual outdoors city center die. Here in Germany it’s always discussed “why are the city centers dying?” when I feel like the obvious answer are those horrible malls that pop up everywhere. Instead, politicians lower busines taxes and think this solves everything.

The Walmart HyperMart that opened in Garland, TX (a suburb of Dallas, TX) at the junction of I-635 & TX78 in the 1990’s is an excellent example of the cost of the business and the buildings. The business was granted tax breaks to build there, and the business was a drain on welfare, police, and traffic services. The road improvements necessary for supporting it are still underway — despite the business being gone for ~20 years now. The building and land stood empty until ~5 years ago, after the city negotiated its sale for unpaid taxes, and is still being remediated on the city’s dime.