Regional Malls Cope with Retail Store Closings
YOUNGSTOWN, Ohio – Store closings announced by retail chains provide a challenge for operators of shopping centers, but in many cases, they’ve already prepared for the potential vacancies.
The Limited women’s clothing chain announced Friday it would immediately close all 250 of its retail stores. Previously Sears Holdings Corp. said it would close 150 unprofitable Sears and Kmart stores, and Macy’s Inc. named 68 stores it would close as part of approximately 100 closings the chain announced in August.
Neither of the Mahoning Valley’s two major retail centers – the Cafaro Co.’s Eastwood Mall Complex in Niles or the Southern Park Mall in Boardman, managed and leased by Washington Prime Group in Columbus – were hit by the Macy’s or Sears/Kmart closings, although both had Limited stores. But the Shenango Valley Mall in Hermitage, Pa., suffered a double-whammy, losing both its Sears and Macy’s stores.
“This is typically the time of year this happens. The entire industry has become accustomed to it,” said Joe Bell, spokesman for the Cafaro Co., Niles, which operates shopping centers across the country. “If a company is going to realign or declare bankruptcy or make major changes, this is when it will happen.”
Real estate agents “know which retailers might be the weaker ones so they start months in advance looking at those locations and marketing them to potential tenants,” Bell continued. Sears has been struggling “for the better part of the last decade.”
The Macy’s at Cafaro’s Sandusky Mall, where Sears closed last year, is among the announced closings, he noted. In addition, the Meadowbrook Mall Sears in Bridgeport, W.Va., and a Big Kmart in St. Clairsville’s Ohio Valley Mall, two more Cafaro properties, are slated to close.
Through Goodman Public Relations, its marketing firm, Washington Prime Group declined to comment, noting that neither the Southern Park Sears nor Macy’s are affected, and the Limited closing was part of a chain-wide event.
The Shenango Valley Mall’s general manager, Paul Vidwan, was in a meeting when contacted and did not respond to a request for comment.
The Cafaro Co. has been successful in lining up replacements for some of the vacancies left by department store closures, Bell reported. At Mill Creek Mall in Erie, Pa., Boscov’s, a department store chain headquartered in Reading, is not only taking over the space vacated by Sears but is adding 26,000 square feet. “We’re happy about that situation,” he said.
At Cafaro’s Kennedy Mall in Dubuque, Iowa, the space Sears vacated a few years ago has been filled by Vertical jump, an indoor trampoline park, and a Planet Fitness gym, he added.
“In some cases, you find a big-box retailer or department store willing to move into that space, but department store options are smaller than they used to be, with fewer players,” Bell said. “Consequently, our leasing agents have become very resourceful and creative in finding other uses for those spaces.”
Options include subdividing larger spaces for use by multiple users such as restaurants and smaller shops, he said.
The Sears and Super Kmart stores at the Eastwood Complex continue to do well but, Bell said, “We would be foolish to say we haven’t been concerned” as everyone in the industry is about the chain.
There is no indication either is in imminent danger of closing, he said, and the Cafaro Co. stays in “constant contact” with Sears Holdings. “We do whatever we can to facilitate their good retail health.” Bell said.
The Super K has eliminated overnight hours, which is “typical of the overall strategy they’ve employed nationwide, cutting back hours or closing off certain portions of stores to cut operating costs,” he remarked.
Leasing agents likely started months ago looking into options for Limited spaces, he observed.
In addition to Eastwood, two other Cafaro properties have Limited stores.
The Limited stores are “middle of the road” inline spaces and “not particularly difficult” to lease in terms of size, according to Bell. “They are not small but not overly large spaces,” he said.
Reis Inc., a commercial real estate information firm based in New York, estimated the regional mall vacancy rate during the fourth quarter of 2016 at 7.8%, unchanged from the previous quarter or from the fourth quarter of 2015. Asking rents rose 0.4% for the quarter and 2.0% for the year.
“In short, the fourth quarter statistics show that the growth in e-commerce that has led to scores of store closures across the U.S. is truly starting to impact many retail property markets in a meaningful way,” as evidenced by the Macy’s and Sears/Kmart closings, the company said in its report on sector trends.
Copyright 2022 The Business Journal, Youngstown, Ohio.