Banking & Finance

Retailers See Hope in Shenango Mall Receivership

HERMITAGE, Pa. — Visitors to the Shenango Valley Mall have seen a retail center hollowing out. A year ago, it lost two anchor tenants – the Macy’s and Sears department stores – and other tenants have vacated since.

Nevertheless, Vince Hillard sees opportunity.

Hillard is co-owner of Leanna’s Books & More, one of the remaining tenants in the Mercer County retail center that went into receivership last week after its owner, JSMN Shenango Valley Mall LLC of Paramus, N.J., defaulted on its mortgage.

JSMN owes $3.43 million in principal, interest and penalties to Iowa Square Realty LLC of Great Neck, N.Y. It has not made a payment on the commercial loan since January 2017, according to court documents.

Iowa Square filed foreclosure last April. Earlier this month, U.S. Magistrate Cynthia Reed appointed Philadelphia-based Metro Commercial Real Estate Inc. as the receiver. The appointment was agreed to by JSMN in a joint stipulation filed with U.S. District Court for Western Pennsylvania .

Hillard’s store is approaching six years as a tenant at the Shenango Valley Mall.

“It’s what I call a goldmine,” he says. The retail center sits on the best intersection in Mercer County and is just a few miles from Ohio, which, unlike Pennsylvania, charges sales tax on clothing. “It’s beyond me why clothing retailers haven’t just flooded this mall to come in here and set up shop,” he explains.

Still, the signs were there — and not just the empty storefronts, Hillard noted.

“The mall really hasn’t been taken care of, and you can tell that they were absentee landlords, so to speak,” Hillard said. “The rumors were out there that they weren’t paying [the mortgage] as well. We didn’t know whether it was true or not but it didn’t surprise us.”

Mall tenants learned last Tuesday that the court had placed mall operations in receivership, office manager Brenda Duncan told The Business Journal. Tenants are largely optimistic, and waiting to find out how the case proceeds, she added.

“Most of them have been through this before so they know what’s going to happen,” Duncan said. The property first went into receivership in 2009, when its previous owner, New York-based Lightstone Group, defaulted on commercial mortgages.

So it was that news the mall had been placed into receivership again did not surprise the tenants interviewed Friday.

“It’s been going back and forth for a few years,” said Shai Tuli, co-owner of Shail Jewelers, a tenant since 1999.

Steve Ritenour, manager at Nadine’s Pittsburgh Sports, which sells Pittsburgh Steelers, Pirates and Penguins merchandise, said he was “not at all surprised.”

Throughout Friday, Ritenour responded to phone calls asking whether the mall was closing — it’s not — and whether his store was closing as well — same answer.

Ritenour is among those optimistic that about the receivership. In the nearly seven years he has worked at Nadine’s – the store has been in the mall 16 years, he said – no one from the mall ownership has stopped in to see how things were going. “You just never see anybody — ever,” he said.

All three retailers said the loss of the anchor retailers has hurt their businesses.

“If anybody said that they haven’t lost some sales or foot traffic, they would be lying,” Tuli said. “The traffic is definitely down but we’re pretty established in the Valley. So we rely a lot on our everyday customers and repeat business.”

Sales last December at Nadine’s Pittsburgh Sports were about 70% lower than the December of seven years earlier. Retenour attributed at least part of that decline to the rise of Amazon and other online retailers.

“Probably 15% to 20% of our yearly sales were people who were just walking by,” he said. “Now you take those [anchor] stores away, that takes those people away.”

Nadine’s is a destination store, one reason it has remained in the mall, he said. People know if they want Pittsburgh sports merchandise they can find it at his store.

Hillard similary acknowledged feeling the effects of the Macy’s and Sears closings, and like Ritenour his store is a destination as opposed to relying exclusively on casual customers from mall foot traffic. His store has spent money on advertising and has rebuilt sales to nearly where they were before the two retailers pulled out.

“Obviously, if we get anchors in, it would do a lot better,” he said.

The Shenango Valley Chamber of Commerce has worked with the property since the announcements about the Sears and Macy’s closings, Sherris Moreira, executive director, said.

“There’s a lot of moving parts,” she stated. “We’re here to be supportive but these parts are playing out on their own.”

Whether the mall will recover depends on finding a new owner — one willing to invest in the property.

“That would be the ideal situation,” Tuli said.

“It’s going to really depend on when the bank finds a new owner for the building, if they’re in it to build a business out of it or if they’re in it to make money,” Hillard said. “The last owners were in it to make money. So they didn’t put anything back into the business, only took out of it.”

While he sees opportunity, Hillard also urged local shoppers to support retailers by coming to the mall.

“The local shoppers are going to find out, if they haven’t already figured it out, there’s only going to be Walmart left. And they’re going to have to travel to Ohio to buy everything. So they should hope that somebody comes in here and builds it up,” he said.

Pictured at top: Vince Hillard, owner of Leanna’s Books & More at the Shenango Valley Mall.

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Published by The Business Journal, Youngstown, Ohio.