Mall wear | Retail centers find creative ways to fill vacancies while riding out the recession
Photo/Tim Greenway
Cari Barney of Glowgolf at the Maine Mall in South Portland
Two of the newest businesses at the Maine Mall don’t look like the other outlets around them. They don’t have large front windows revealing a bright floor of clothing racks or shoe displays. Instead, they have dark, tinted windows, and when you take a peek inside, appear to be outfitted like futuristic playgrounds.
Yet these two unusual mall occupants — Glowgolf and Summit Adventures Extreme Family Entertainment Center — exemplify a retail trend across the country. As mall managers grapple with a struggling economy and dollar-conscious consumers, they are increasingly seeking unconventional ways to fill vacant stores.
“Mall owners are challenged by many factors today,” says Jack Plunkett, CEO of Texas-based Plunkett Research, a market-research firm. “America is overbuilt with mall space in many parts of the nation. Also, in some cases, malls have become outdated or are located in neighborhoods in decline. As a result, there has been a gradual, but important, trend for malls to modify their business models.”
Many national chains stopped expanding into secondary or tertiary markets during the downturn, and large spaces formerly leased to major department stores are now being cut up or repurposed, Plunkett says. “Leasing former prime retail space for [other] purposes is something of a capitulation, a statement that there is no viable retail tenant available, and the mall operator doesn’t think that one will appear any time soon.”
Dentists’ offices, motor vehicle departments, karate schools, gymnasiums, churches, post offices and call centers are all found at malls these days. TD Bank last year opened a call center in the Auburn Mall, partly to renovate an existing space and partly to attract employees who appreciate the convenience of nearby shops.
George Schott, owner of the Auburn Mall, says while he’s happy with the call center, located in a former Porteous department store, he’d still prefer a retailer. “But there is no retail moving,” he says. “My quick gut feeling is that every mall owner would appreciate that type of usage. That is not a bad usage.”
TD Bank’s call center signed a 10-year lease. When Porteous moved out about a decade ago, Schott says the anchor space stood empty for years. “Sixty-thousand empty square feet is a big hindrance for anyone wanting to go in near it,” he says.
Traditional anchors, like Macy’s, JCPenney and Sears, have always been considered the big draw for smaller nearby tenants, according to Jesse Tron, a spokesman for the International Council of Shopping Centers, a mall trade group. But when the crumbling economy caused mall anchors and other stores to go dark, he says malls were left scrambling to keep customers coming to their remaining shops.
“The name of the game was adapt and adapt quickly,” Tron says. “So if you had space and couldn’t find a tenant, you brought in a nontraditional tenant — especially things where you get a spillover effect. People drop their kids off at gymnastics and spend one hour in the shopping center.”
Also, if the unconventional mall tenant employs many people, (TD employs 500 at its call center), that can be a selling point to other tenants, says Todd Norley, a leasing representative with WS Development Associates in Chestnut Hill, Mass. “If you add a different element to the mix, you can market your space to tenants based on the fact you have a built-in customer base. Those people have to eat lunch, do their errands,” he says. “[Malls] are not just trying to fill space, but also add value.”
Back at the Maine Mall, customers inside Glowgolf swing their glow-in-the-dark clubs at fluorescent balls between walls gleaming in the black light. The Kansas-based company has many similar golf entertainment centers across the country, all in malls. It opened its location at the Maine Mall in March, according to Cari Barney, the South Portland manager. Barney says that not only does the luminescent interior draw in curious shoppers, but people who come to play miniature golf also often end up shopping or eating at the mall. “We are a destination,” she says. “We bring a lot to the mall.”
Craig Gorris, Maine Mall’s manager, agrees. “Glowgolf skews to a little younger demographic,” he says. “They bring traffic that otherwise wouldn’t come here.” And when the weather’s bad this summer, he anticipates pulling in the usual rainy-day shopping crowd and attracting people seeking a bit of a thrill.
He says Summit Adventures, too, attracts a customer who “aligns well” with the mall. Summit Adventures, owned by Jeffrey Hunnewell, opened last fall in a portion of the 40,000 square feet once occupied by Linens n’ Things. It is filled with attractions like a human-hamster ball floating in an indoor pool, a small track for radio-controlled vehicles, several bungee trampolines, two foam ball cannons, a tightrope course and more.
“[Summit Adventures] attracts someone who likes to be active, outdoors, on the go,” Gorris says. “A store that sells outerwear, active wear or sports apparel will align with that customer.”
Hunnewell says the mall has been great for business exposure, and he’s also pleased with the short-term lease he signed for a reasonable rate based on his revenues. But he worries about the unpredictability of having a shorter lease. He was recently told another tenant is moving in and that he must relocate Summit Adventures, despite having invested $15,000 to $20,000 into the space, he says.
Luckily, Hunnewell says he has signed a new year-long lease for the former Filene’s at the mall, and that he will be looking for something more permanent over the next year.
While Gorris says malls must adapt to changing consumer tastes, he, like Schott, considers retail to be preferable to non-retail. “Alternative uses [do] not pay as high a rental rate as traditional uses,” he says, which is why he signs them up with short-term leases. Rental rates are based on sales volumes.
However, an eclectic mix can have a happy ending, Tron says. “Sometimes landlords find that [non-retail] use is a great use for that space, bringing in tons of new customers. But other centers don’t see that value, and probably for the most part, we’ll see malls go back to their traditional tenant mix.”
Norley, too, thinks the trend will be short-lived. “I don’t think people will be doing crazy deals with call centers for much longer,” he says.
Gorris says the jury’s still out on whether the glowing miniature golf course and the adventure center will work out in the long term. “We have to give it some more time. In the end, the rental rates play a big factor. Can Glowgolf pay the rates we need to have?” he says.
For his part, Hunnewell says he thinks businesses like his enliven the mall. “The more of this stuff [like us] at the mall makes it more of an exciting place to visit,” he says. “You can only have so many shoe stores.”
Rebecca Goldfine, Mainebiz staff writer, can be reached at rgoldfine@mainebiz.biz.
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