Metro Jacksonville

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http://www.nytimes.com/2009/04/05/business/05mall.html?pagewanted=2&_r=1&sq=malls&st=cse&scp=1

QuoteIn these desperate days in American retailing, mall owners are seizing on a new gimmick: wave-making machines.

A half-dozen malls across the country are planning to install a huge contraption called the Flowrider in vacant retail space. Where once people shopped for three-packs of underwear or sheet sets, they are now turning up in flip-flops and shorts to surf an artificial patch of ocean.

However good a business that turns out to be for the company controlling the Flowrider, it is also a sign of the times. With major retail chains like Linens ’n Things and Circuit City closing stores or disappearing altogether, mall and shopping center vacancies are soaring, forcing landlords to find new ways to lure traffic and stave off decline.

Downscale chains that landlords once kept out of shopping centers are suddenly being shown the welcome mat. Temporary stores are popping up. Once-small retailers are being invited to take over big spaces, while the strongest national chains are seizing the moment to move into new cities at low rents. And vast mall spaces formerly occupied by department stores may soon be carved up or turned into community colleges and dance studios.

“Landlords are scared,” said Suzanne E. Mulvee, a real estate strategist with Property & Portfolio Research. “Part of the reason they’re scared is dark space doesn’t pay.”

When the nation’s stores report March sales results this week, the numbers are likely to be down yet again â€" especially for department stores and mall chains, which have been the weakest performers for months.

That does not bode well for mall owners. As more stores have closed, mall vacancies are at their highest point in almost a decade, according to Reis, a research company, which said the vacancy rate at the end of 2008 was 7.1 percent, compared with 5.8 percent at the end of 2007. Other analysts have slightly lower figures, but all agree that vacancies are rising.

For some retailers, the brutal environment means new opportunities. That is especially true for the one major retail category faring well nowadays â€" discounters, like dollar stores and Big Lots, that are suddenly moving into more prominent locales.

“They were shunned for five years by the landlord community,” said Spence J. Mehl, senior vice president at RCS Real Estate Advisors. “And now everybody’s knocking on their door and they’re cutting incredibly aggressive deals, because they can.”

Of all the vacant spaces, the most difficult to fill are anchors â€" those big stores at the periphery of a mall. In recent months, Macy’s, Sears, Dillard’s, Mervyns and Steve & Barry’s have closed big mall stores. Last week, the bankrupt Gottschalks department store chain began liquidation sales.

Greg Maloney, president and chief executive of the retail group at Jones Lang LaSalle, a real estate brokerage firm, said that to fill empty anchor spaces, landlords were getting creative and were considering bringing in grocery stores, medical facilities, dance studios and even community or technical colleges.

“I think you’re going to see a lot more of that,” Mr. Maloney said.

Several schools â€" like New River Community College in Virginia and Hagerstown Community College’s Center for Continuing Education in Maryland â€" have been holding classes in malls for years. But industry professionals say the trend is likely to accelerate.

With Americans buying less, many chains are asking mall owners for rent reductions, and are sometimes receiving them. That adds to the malls’ financial woes.

One of the nation’s largest mall owners, General Growth Properties, is laden with more than $25 billion of debt, has missed payment deadlines on its bonds, and is trying to avoid filing for bankruptcy protection.

Landlords are willing to lower rents for their best retailers â€" but only those that can prove financial distress. The landlords may not be able to play hardball for long, though. More major chains are expected to file for bankruptcy this year, leaving behind empty stores.

In this economy, few chains need spaces as large as the ones coming onto the market.

“I talk to landlords and they’re taking an old Dillard’s box and putting a Best Buy on the top level and a Dick’s Sporting Goods on the bottom,” said Joseph Feldman, a retailing analyst with the Telsey Advisory Group.

Researchers who study land use point out that while the recession set off the latest round of vacancies, the problems faced by mall owners and developers have been building for more than a decade.

“There was really no relationship between development and the increase in consumer spending,” said Stacy Mitchell, a senior researcher with the Institute for Local Self-Reliance, an advocacy group.

Between 1990 and 2005, consumer spending per capita rose 14 percent, adjusted for inflation, yet retail space per capita in the United States doubled, said Stacy Mitchell, a senior researcher at the Institute for Local Self-Reliance, an advocacy group.

In her view, that created too much store space even for a good economy, and then retailers were hit by the recession. “All of this overdevelopment has pulled the rug out from under them,” she said.

While mall owners may be batting around plenty of unusual ideas, the Flowrider â€" a 10-feet-tall wave machine that sends 35,000 gallons of water gushing over a slope at more than 30 miles an hour â€" is among the most unusual.

The device is the centerpiece of a cult sport that got its start in water parks and on cruise ships. Lately, a retail chain called Adrenalina, which sells gear for extreme sports like skydiving and kite-surfing, transferred the concept to retail stores.

Because the machines can draw enthusiastic crowds, Adrenalina is getting sweet deals from landlords. Adrenalina executives said some mall owners were paying to install the Flowrider, upwards of $2 million, just to get the extra traffic.

“They know that we’ll pull people from a further distance than their regular tenants,” said Jeffrey Geller, president and chief operating officer of Adrenalina.

An Adrenalina store that opened last month at the Shops at Willow Bend in Plano, Tex., is already a popular destination. Steven Coyne, an Adrenalina district manager in Dallas, said that in the few weeks the store has been open, the Flowrider has garnered repeat customers â€" and stupefied gawkers who cannot believe people are riding waves inside a mall.

“The funniest question I’ve ever had,” he said, “was, ‘Are those real people?’ ”

It will be interesting to see how this plays out locally.  At this point, it appears that Regency is the only major enclosed mall on the brink of collapse.  Since the beach is nearby, I don't know if the Flowrider concept will work here.

They should turn the Regency mall into a theme park to support the retail.

I was thinking about Regency's future the other day. We have Recency Mall, The Avenues and SJTC all in pretty close proximity. We have Orange Park Mall that can easily serve the West side and the new mall on the North side which is nice but limited in store selection. I live in the Urban Core so I am biased but it seems like a mall Downtown would make sense. Areas such as Springfield, San Marco and Riverside/Avondale would all benefit from an intown location along with all close in areas. Any of these locations could service the Urban Core but for available land, Downtown seems the perfect choice. When I lived in New Orleans I did all my shopping Downtown on my lunch hour or after work.

Greenville SC is kind of a poster child for what has occurred in malls over the last decade.  When I moved here in 1996, there were three.  The oldest of the three was purchased by the local technical college.  They put the college bookstore and many of the admin functions in one wing.  Another wing was leased to an education consortium that supports off-campus classes for several colleges across the state.  The remainder is leased to non-profit type entities, many with an education focus. Still other spaces are leased to restaurants, temp agencies, and other businesses that support the larger users. 

It has been a great reuse in my opinion. 

The second one has been razed, with plans for a SJTC-type power center development in it's place.  That mall always sufferred from it's close proximity to the largest (and still remaining ) mall. The remaining mall is doing very well, and is nearly 100% leased.  However, I believe even it has seen it's best days.  Once the aforementioned power center is built, it will no doubt take a hit.  Enclosed malls are on the downside of their lifcycle, IMO.             

Quote from: JeffreyS on April 06, 2009, 02:32:22 PM
They should turn the Regency mall into a theme park to support the retail.

I was watching Roger & Me the other day.  I wonder if a theme park at Regency would suffer the same fate as Flint's AutoWorld amusement park.

Quote(http://upload.wikimedia.org/wikipedia/en/9/9f/SFAWlogo.png)

AutoWorld was an indoor theme park in Flint, Michigan, USA, built to make the town attractive to tourists. The theme park opened in July 1984 and was originally set up as a Six Flags amusement park venture. However, it went bankrupt and closed during its first year. After an attempted revival in the summer of 1985 and other attempts at making the complex viable, it was demolished in 1997 and the land sold to the University of Michigan-Flint.

http://en.wikipedia.org/wiki/AutoWorld

I know the malls that vicupstae is talking about. The remaining enclosed mall in Greenville, Haywood Mall, was the place to go when I was a teenager. The one being torn down, the Greenville Mall, I think, was already dead when I was in high school. Numerous attempts to revive it where never successful. The mall purchased by Greenville Tech also tired to revive itself as a mall at one point. It's a shame that it wasn't successful as it's the first enclosed mall in Greenville and I believe the first in the state.

Bring back the old Phillips Mall - which is now Class 1 office space at Emerson and US1. Before it was a dump, about what Regency is today.

The Avenues really needs to try and land a big name anchor like Macy's or Saks in order to continue to compete with SJTC. If not, The Avenues will slowly meet the same fate as RSM.

Belk needs to consolidate into one store, and vacate the other. I just really wish they wouldn't have purchased Parisian's.

I agree Reednavy.

Quote from: reednavy on April 07, 2009, 01:22:53 PM
The Avenues really needs to try and land a big name anchor like Macy's or Saks in order to continue to compete with SJTC. If not, The Avenues will slowly meet the same fate as RSM.

Belk needs to consolidate into one store, and vacate the other. I just really wish they wouldn't have purchased Parisian's.

Since Simon Properties owns them both, they're more bent on getting the new development filled first (SJTC). As a result, the leases are quite a bit cheaper there while they don't offer better rates for tenants at the Ave's.
They should be more concerned with being able to keep their current tenants in place and tweaking some lease agreements a little bit, or stores will begin to pull out of there.  Think about this: when a retail company files BK to reorganize, they have their lists of stores to keep or close - a location's rent is considered in that decision, sometimes disregarding ample sales figures, making it a target for closure.

I was in Regency for some random reason on Saturday after RAM. Not sure why I ventured out that way, I think I was curious to see what had become of the place. After crossing my fingers not be robbed or shot at the first thing I noticed was that for a Saturday about 1pm the place sure had a lot of parking spots. There was the normal flow of kids in the mall and some adults with kids but overall it was dead. The number of vacant store fronts is alarming and it appears mall maintence is non existant (i almost tripped over a hole in the floor that they had simply covered with yellow and black duct tape). It is kinda sad, and I almost hate to say this, but I wouldn't be upset to see the entire mall redevolped as something useful.

Cliffs,

I think you're refering to General Growth Properties, GGP, which is probably preparaing to file for protection. They have a ton of debt due up soon if they do not get extensions.

nah...
I did mean Simon... but wasn't implying that THEY were in danger. Only that their management is not keen on renegotiating a lease to benefit a retailer. GGP/Regency offered too low a rent to get any kind of business in there, and look what a patchwork job that created - you can clearly tell one side of the mall from the other.

About the Avenues: I"m going from what a store manager in the Avenues told me about his store being on the 'consideration' list when his company filed a few weeks ago (and also his district manager's notes). If it wasn't for the good sales figures in that store, they might've closed it instead of another local one being chopped.
All because of the rent.

I am guessing you are referring to ritz camera.  If Regency had a simon managing it I think it could go in a successful direction.  The east wing (old mall) seems to be the more profitable side.

I like the Regency Mall and shop there a lot. I'm a curvier girl and they have Torrid.  So I make the trek from the Westside once a month to go into that store. As for the OP mall I rarely go into that mall. It's become a teenage mecca with parents dropping them off, letting the mall be a babysitter.

As for the SJTC, I almost never go over there. The traffic is a joke and I can get most of the stores that I would be interested in at the Oakleaf Town Center.

Quote from: TheProfessor on April 07, 2009, 06:22:10 PM
I am guessing you are referring to ritz camera.  If Regency had a simon managing it I think it could go in a successful direction.  The east wing (old mall) seems to be the more profitable side.

Yep. I really, really do not want that Ritz store to close.

I forgot that the east is the "old" mall! That's the renovated new-looking half, so of course it's more profitable. The bigger-name stores and the food court are there. I still remember when it was icky looking, and the movies were crammed up in the food court corner. Course, we're talking about when I was the teenager searching for Mecca.
Anyway, they have a JSO sub-station right there. I know that's supposed to make you feel safe, but knowing it's there kinda does the opposite in that you expect they're needed all the time.

I haven't been to the Regency Mall in at least a year and a half and I live about 10 minutes away. And the only reason I went there was to pick something up at JCPennys. I go to other stores in the Regency area (THD, Target, Lowes) but don't go to the mall. I am not sure there is anything they can do to change alot of people's minds and get them to shop there.

i used to love the big message place owned by some Asian immigrants across from the movie theater. Now the clearance (whatever store) is closing so early practically prevent movie goers to go to the mall to kill time. I do not see Orange or Ave mall have any more attraction. The only reason I go to SJTC is for the Apple store. I do not know Regency is dying aside from the poor management.

On the other hand, maybe they can move all the homeless housing and social services to regency mall. Everything can be in one place. I am not suggesting anything like a semi-prison. In Boston, the JFK building houses all Federal government stuff. It is very convenient. To convert a mall into homeless/social service center would kill 4 birds in one stone.
1) For the mall, they get tenants instead of empty space 2) for the organizations, they can move out of their expensive downtown real estate and have more space for the money. 3) for the homeless, they can have food, shelter, job training,  consultation, religious service etc.... all in one place. 4) for volunteers, social workers, and people who wish make donations, there are plenty of parking and specific delivery entrance for each store (organizations) .

Soon, only Macy's will be around, as all the others consolidate. So you have Macy's or Wal-Mart.

Who goes to the Mall to shop these days when its all available online?

QuoteWho goes to the Mall to shop these days when its all available online?

Your not married are you? 8)

hi, BT: I usually think you are cool. But you are open yourself (and many others) to a lot of trouble by suggesting malls are female recreational destination. ;)

It was just a small joke fatcat... from a married guy whose wife likes the mall. :)

Hell, it's not about married/single, nor male/female gay/straight either.

I'm a guy who likes going to malls and 'shopping,' if not religiously or regularly.  The fiancee and I live in very close proximity to the SJTC.  We love walking over and walking around and just generally 'being there.' 

It is indeed a 'lifestyle center,' as it is correctly called, in that it's more than just a clustering of retail stores and restaurants in one mostly-centralized location.  It's a neat place.  It can be its own destination.  It's more than the sum of its parts. 

I could very easily buy practically everything I'd ever need online.  But why?  I can take a walk, get some exercise, and get out of the house for a couple hours by visiting my local retail establishment.

Enclosed malls of bygone decades were most likely destinations in their own right and in their prime, but whose time has come.  Enclosed malls of the past giving way to open malls of the present is emblematic of a paradigm shift, just as practically everything else over a given length of time is.

The Regency Mall was *the* place to be once.  Well, who wants to go hang out at a place where it was cool for their parents to hang out?  How 'down' is that?  Not very.  Gotta have a new place that we can call 'our own.'  In another 15 years, the SJTC might very well be in the same state as Regency is now, and we'll all have a 'new' SJTC to talk about and rehash this very same conversation.