Rough patch for malls

cloverleafOut of five Richmond malls, only one has a vacant storefront rate below 7 percent – Short Pump Town Center, at 3.8 percent. The highest empty-store rate belongs to the Shops at Willow Lawn, at 17.4 percent.

Malls might be in for a rough patch.

Consumers are downsizing. They’re buying Smart Cars and hybrids instead of gas-guzzling SUVs. They’re shunning casual sit-down restaurants in favor of fast food. And they’re shopping at discount stores like Costco and Wal-Mart, turning their backs on high-end mall-based retailers.

That’s been bad news for area malls, because customers arrive by car and generally buy discretionary goods.

Vacancies at U.S. community shopping centers rose in the second quarter of 2008 to a 13-year high, and vacancies at larger, regional malls were at their highest level since 2002, according to real estate research firm Reis Inc.

Out of five Richmond malls, only one has a vacant storefront rate below 7 percent – Short Pump Town Center, at 3.8 percent. The highest empty-store rate belongs to the Shops at Willow Lawn, at 17.4 percent.

By comparison, the average vacancy rate at community shopping centers nationally rose from 7.3 percent to 8.2 percent this year. For larger, regional malls, vacancies increased from 5.6 percent to 6.3 percent, according to Reis Inc.

Over the past month, BizSense has counted vacancies along retail stretches in Richmond in our “Better Know a District” series. Think of this as “Better Know a Shopping Center.”

We walked through each mall, marking down the number of operating businesses and the number of storefronts that were closed, blocked off, or gated up.

Short Pump had only four non-operating storefronts, the smallest number of any area mall. Regency Square had six, Stony Point Fashion Park had seven, Willow Lawn had eight, and Chesterfield Towne Center had 11 empty spaces.

However, because of Willow Lawn’s small size, it had the highest empty-store rate. Most of the empty stores at Willow Lawn are located inside the strip mall. The indoor portion of the shopping center has 11 operating storefronts and six closed storefronts. That means that over half of the retail space inside the shopping center is inactive.

Willow Lawn is also showing its age. Built in 1956, the center is the grizzled old vet among Richmond malls. Envisioned as a hybrid strip mall / enclosed shopping center, it has always had trouble keeping “anchor” stores, department stores or major retail chains that help provide financial stability. Original anchor stores such as JC Penney and Miller & Rhoads left years ago, and others such as Belk’s, Dillard’s, and Barnes & Noble have come and gone in recent years. Nowadays, the enclosed shopping center is empty and poorly lit, and the food court consists of only two restaurants.

Regency Square and Chesterfield Towne Center had empty-store rates of 8.9 percent and 9.4 percent, respectively. Both malls were built in 1975, and thus carry a tweener status – not the oldest, but not the young guns. Fittingly, their closed-store rates fall right into the middle of the pack. They’re not new and shiny, but they provide what people want, a convenient place to shop.

Short Pump Town Center and Stony Point Fashion Park are the new kids on the block. Built in 2003, the two upscale outdoor malls opened in the same month, competing directly. With the lowest closed-store rate of any area mall, Short Pump appears to be doing the best as far as keeping tenants. Stony Point has the second lowest closed-store rate of Richmond malls at 7 percent.

Nationally, mall-based retailers are expressing concerns about dwindling sales. Some say that high gas prices and commodity costs are driving away their most active customers: teenagers. Others are seeing consumers turn to discount chains like Wal-Mart for their shopping needs.

But in Richmond, store managers say that their mall-based shops have seen little or no slowdown. In fact, most are meeting or exceeding sales goals.

“Our sales numbers are about the same as last year,” said Rodney Wheeler, a General Manager at the Aeropostale in Regency Square. Wheeler said that for a mall like Regency Square, store traffic depends on a lot of external factors. He said that the recently-built Short Pump and Stony Point malls may have initially drawn people away from Regency. Ultimately, though, consumers will shop at the most convenient spot for them, Wheeler said.

Another manager at a popular clothing retailer, who asked that her name not be used because she isn’t allowed to talk to the press, said, “We have goals based on LY’s (last year’s sales numbers), and right now we’re meeting them or doing better than them.”

At Chesterfield Towne Center, a manager said: “Really, I haven’t noticed any considerable difference from last year to this year as far as in-store traffic or sales.”

That helps to explain why malls like Regency and Chesterfield Town Center are able to succeed; they have very strong ties to their localities, and they are located near large residential areas where people need a place to shop.

They’ve also kept anchor stores like Hecht’s and Dillard’s around, something that Willow Lawn has failed to do.

Malls that have a high vacancy rate and a low consumer-traffic level are often referred to as “dead malls” or “grayfields.” Several sites on the web are dedicated to tracking these forgotten shopping centers, the best example being Virginia has 14 shopping centers listed on the site. The recently deceased Cloverleaf Mall is one of them.

Alec Depcrynski did not buy one article of clothing while filing this report. He covers retail, commercial real estate and general assignments for BizSense. Please send story tips to [email protected]

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