Richmond’s mall operators are less choosy in selecting tenants now, and that’s helped them boost occupancy compared to six months ago. Some have added stores like nail salons, dollar stores, and tattoo shops.
In April, BizSense counted empty storefronts at six area shopping malls, and found that about 15 percent of the storefronts at malls around the region were vacant.
That figure has shrunk to 9.2 percent in the first week of December. And that figure is even lower than last December, when BizSense found that the combined storefront vacancy was 9.6 percent.
Vacancy figures for commercial real estate are generally calculated based on square footage, not storefronts, but malls do not release those figures.
Vacancy (calculated by square footage) at malls across the country was 8.6 percent, up from 6.6 percent last year, according to Reis Inc., a New York real-estate research firm. That figure is slightly better than non-mall retail space, which had a vacancy rate of 10.3 percent in the third quarter, according to Reis.
There also seem to be more stores you wouldn’t always expect to find in a mall – such as beauty supply shops and exercise studios.
But like last year, Short Pump Town Center still reins king of occupancy with only four percent of total storefronts vacant. That is about the same as it was last year, and slightly better than the spring when the mall was 6 percent vacant. BizSense counted only five empty stores spaces out of 128.
Virginia Center Commons has been busy adding stores since spring when 21.4 percent of the mall’s storefronts were empty, just about one of out of five. The mall now only has nine empty storefronts, about 8.4 percent of the total. Some of the new stores also appear to be “pop-up” shops, which have short term leases and only operate during the holiday season, such as stores selling calendars and board games.
The percentage of unoccupied stores also increased at the area’s other malls since the spring. Willow Lawn is at 15 percent vacancy, down from 23 percent in April, Stony Point Fashion Park is at 10.8 percent from 13.7 percent, Regency Square is at 9 percent from 21.2 percent, and Chesterfield Towne Center is at 11.8 percent from 15.6 percent.
Chesterfield Towne Center has also continued to be creative when it comes to new tenants. For example, this last summer Lunar Golf, an indoor putt-putt course, has set up shop inside a former Dillard’s department store.
“We used to have a movie theater before we had Barnes & Noble, so we didn’t have an entertainment aspect to the center,” said Denise Smith, the mall’s marketing manager. “We felt like Lunar Golf being brand new and the first in Virginia, was a great opportunity to add a family entertainment aspect to the retail mix.”
Smith said in addition to new tenants in the mall such as Jimmy John’s and Franco’s Fine Clothier, a Ross Dress for Less opened in October at Towne Center West, an adjacent shopping center also owned by the mall owner/operator Macerich.
While retailers may face the same tight pocket books as last year, this time around they are more prepared, she said. Smith said mall merchants have adjusted their inventory levels to create better margins for themselves.
“[Last year retailers] did not have time to adjust to the changing economic climate,” said Smith, “I think this year retailers are much better prepared and have adjusted their business model accordingly to the consumer mindset.”
Smith said that she expects to make some more store announcements after the first of the year.
“We are seeing more interest form retailers again, for quite a while they were not looking to expand,” she said.
Brian Glass, a broker specializing in retail with the brokerage firm Grubbs & Ellis | Harrison & Bates, said the over all retail vacancy rate (in square feet) for the Richmond metro area is 7 percent. As a result, he said property owners have been more willing to take on unconventional tenants to keep the rent coming in.
“Landlords are maybe not downgrading the type of tenant but they are more willing to move in a tenant that may not be best mix and fills up vacant space. You have to do that if you have a mortgage to pay,” Glass said.
Glass said rental rates are now being negotiated at 15 to 20 percent less than they were this time last year. Landlords are also offering free rent and more build out assistance, he said.
Mall worth 65% less now, BizSense
The owners of Regency Square mall in Western Henrico County announced today that they have written down the value of the 34-year-old mall by more than $55 million dollars.
Al Harris covers commercial real estate for BizSense. Please send news tips to [email protected]