That Mall is sick and that Store is dead!

April 1, 2005

"This place has really gone downhill."

Filed under: newmarket fair mall — Anita @ 7:05 pm

An article I found recently on finditva.com (I found it using my old library card from when I lived in Hampton) about my personal dead mall, Newmarket North/Newmarket Fair (now called Netcenter) in Hampton, VA:

A MALL REBORN AFTER STRUGGLING AS RETAIL, HAMPTON’S NEWMARKET FAIR HAS NEW LIFE AS OFFICE SPACE; JENNIFER GOLDBLATT, STAFF WRITER
Virginian Pilot (Norfolk) 04-02-2000

A MALL REBORN AFTER STRUGGLING AS RETAIL, HAMPTON’S NEWMARKET FAIR HAS NEW LIFE AS OFFICE SPACE
Byline: JENNIFER GOLDBLATT, STAFF WRITER
Edition: FINAL

Section: BUSINESS
Memo: Staff researcher Diana Diehl contributed to this report.

HAMPTON —

By 10 o’clock weekday mornings, Newmarket Fair’s parking lot is so packed that it would draw envy even from MacArthur Center.

But inside, most of the shopping is confined to Sears Roebuck & Co., where racks bloom with the pastel suits and blouses of the spring collection. A few shoppers peek out of Sears’ mall entrance and spot a fitness center, an abandoned drugstore, and faded purple- and-teal metal hangings dangling over a sea of ripped-out storefronts.
Most turn on their heels, but Tom Mcalhany ventures into the mall.

“I just want the exercise,” he says. “This place has really gone downhill.”

Newmarket Fair, crowned 26 years ago as the Peninsula’s first enclosed mall, is being recycled as an office complex with enough retail to serve workers’ needs. Decimated by bankruptcies and squeezed by competition, the mall is being reborn as Newmarket Center.

The plan is to bring in more office users, move the 37 remaining retail tenants closer to the office space, and sign up new tenants to provide services such as day care and dry cleaning for the office workers.

This is the largest such conversion in Hampton Roads. At 574,000 square feet, Newmarket Center is about as big as Pembroke Mall in Virginia Beach. The center is one of a handful of opportunities that Virginia Beach developer Gerald Divaris sees nationwide, as bankruptcies and shifts in retail leave vast empty shells.

With free parking, ample space and maybe a government incentive or two, more and more retail washouts are finding new life as places to work rather than places to shop.

“This will no longer function as a retail mall,” said Jim Perkins, a project manager with ESG Properties, the Virginia Beach-based real estate development company that owns the property and is led by Edward Garcia. “You can’t force an issue; you’ve got to go with what the market will bear.

“That,” he said, pointing to Rouse Tower, the 12-story “B” class office building across Mercury Boulevard, “that’s our competition now.”

When baseball great Ted Williams cut the ribbon on Newmarket North in fall 1975, the $35 million project was hailed as Tidewater’s “first two-tiered mall,” boasting the area’s largest Sears, at 240,000 square feet, and Miller & Rhoads, at 123,000 square feet, and a Leggett department store that spanned 120,000 square feet.

It was a joint venture between the Hahn Co., a San Diego-based developer, and a Nashville-based insurance company.

Together with 18-year-old Newmarket South Shopping Center across the street, it was “the largest high-fashion retailing center” in Virginia.

By 1987 the outlook had dimmed.

Patrick Henry Mall was opening about 10 miles away, complete with a Bradlee’s discount store and a Hess’s Department Store. Miller & Rhoads was having trouble.

But executives at Goodman Segar Hogan Inc. saw opportunity glimmering.

The surrounding neighborhoods were dense with high-income households. The mall was due for a renovation. It could become a community-oriented center, something along the lines of Pembroke Mall.

“We went after this thing hot and heavy, and we had every reason to believe that we could turn it around,” recalls Jay B. Lafler, then senior vice president with Goodman Segar.

Miller & Rhoads assured GSH that despite the company’s troubles, it was committed to Newmarket, said Lafler, now a vice president with Commercial Property Management, a Richmond-based firm.

GSH bought the property as managing general partner for the Connecticut Teachers Pension fund for $33.9 million in 1987.

The center was 85 percent occupied, and most of the tenants were national chains. The mall averaged $160 per square foot in sales annually, matching the national average for shopping malls at the time.

GSH sank $9 million into the renovation, redecorated and added a carousel, a children’s play area, a food court, skylights and kiosks. The new name, Newmarket Fair, and a logo with three flags were meant to reflect the entertainment focus.

But in 1989, Miller & Rhoads filed for bankruptcy. The next year it closed its doors at Newmarket Fair.

Once that happened, “things kind of snowballed,” Lafler said.

The retail industry was quaking. Industry giants such as Federated and Allied Stores Corp. filed for bankruptcy, and few retailers had the funds to expand. Those that did were making big demands on landlords. With the recession, the Persian Gulf War, and massive layoffs at the local shipyards, consumers weren’t spending, either.

Robert Stanton, then president of GSH, said that it was Dillard’s “no thank you” to the Miller & Rhoads site that helped him see what state the property was in.

“It took an outsider’s perspective for it to dawn on us that the trade area was moving . . . and the part of town that used to be the epicenter of shopping was losing its edge,” Stanton said.

One by one, the openings of nearby developments sucked traffic away from Newmarket Fair.

Once the Monitor-Merrimac Memorial Bridge-Tunnel opened in April 1992, drivers no longer had to use the James River Bridge, which had pulled cars down Mercury Boulevard, and right past Newmarket Fair.

In September 1992, with the mall nearly half-empty, Goodman Segar sold its interest to Wilder Management Associates, a Massachusetts- based developer.

Two years later, Leggett closed its doors at Newmarket Fair.

In January 1997, Newmarket North Associates, the entity that owned the mall, filed for bankruptcy, owing $22.4 million to its mortgage holder, Aetna Life Insurance Co.

Again, opportunity beckoned.

This time, it called Divaris.

He knew that abandoned retail space could be recycled as office space.

In 1995, United Parcel Service had opened a package tracking facility in a vacant Kmart store in Warwick Village Shopping Center. MCI Communications Corp. had taken over an old Lowe’s Cos. Inc. store on Warwick Boulevard, and West Telemarketing Corp. had moved into a former Roses store in Willow Oaks Shopping Center.

The selling points for these spaces, and the appeal that the developers are hoping to sell Newmarket on, is available parking, zoning and site work complete, and wide-open spaces. City and state incentives also sweetened the deals. Since the Hampton Urban Enterprise Zone was recently redrawn to include Newmarket, tenants there could qualify for such incentives.

Divaris Real Estate Inc., based in Virginia Beach, already was managing Eastlake Square Mall, a regional mall in Tampa, Fla., that John Hancock Mutual Life Insurance Co. had taken through foreclosure.

The Tampa mall was emptied of its remaining retailers and transformed into Netpark, a complex of class “A” office space equipped with fiber optics, high-speed Internet access and other resources to accommodate office use.

It is promoted for having the same amenities as corporate headquarters, and Divaris sees so much opportunity that he registered the name “Netpark” in every state.

The space in Tampa has been flanked by day care, copying and mail services, banking and health care, plus a food court and fitness center. There’s even a softball diamond outside.

Roughly 25 percent of the space has been leased, including a 500- station call center for General Motors. Roughly 140,000 square feet of space is under negotiation, said John Wingfield, senior vice president with Divaris.

Divaris saw the opportunity to convert Newmarket into another of these “company towns.”

He took the idea to Garcia.

“The Netpark concept was really the vision,” said Andrea Kilmer, vice president of Sans Holding Corp., the Virginia companies owned by Garcia.

In June 1997, Sans bought Newmarket for $5 million and enlisted Divaris as the leasing agent.

Later that year, Bell Atlantic Plus Inc., bolstered by $400,000 in state and city incentives, turned the Miller & Rhoads site into a call center.

Last year, the cities of Newport News and Hampton set up a joint social services office in Newmarket, in a 2,400-square-foot space that “16 plus” clothing stores once occupied. About the same time, AMSEC LLC, a joint venture between Newport News Shipbuilding and Science Applications International Corp., moved in with about 350 employees.

Bell Atlantic put about $26 million into the center, which now employs about 900 people.

Where racks of dresses once hung, cubicles now section off workstations. Where Muzak once played, white noise now buffers the sounds of chattering into headsets.

What’s it like to work there?

“The first impression of the mall is, `Wow, this is a ghost town,’ but there are some hidden perks,” said Marcia Fulford, manager of what Bell Atlantic refers to as the “Mega Center.”

“The free parking is nice and it’s great for mall walking at lunch. You can grab a bite, do 20 minutes of walking and still get back to your desk in plenty of time.”

But Fulford said she’d like to see a few more places to eat, a dry cleaners, a drugstore and a card store to replace the Hallmark store that left a year ago.

“It would be great to run your errands at lunch and not have to get in your car.”

Barbara Gibson, manager of Piccadilly Cafeteria, a Newmarket fixture for more than two decades, says a steady stream of customers has remained loyal to her restaurant, despite the vacancy of the mall and the Piccadilly that opened at Patrick Henry.

The remaining significant retail tenant is Sears, which owns its own parcel. Though rumors have circulated for years that Sears is itching to leave, officials from the nation’s No. 2 retailer say they’re staying put.

“At this point, those are only rumors that Sears would be pulling out. We have no plans to do so,” said Peggy Palter, a company spokeswoman.

Kilmer says that if Sears left, it wouldn’t hurt the conversion effort.

Local real estate brokers say that owners of Newmarket Fair have no choice but to recycle away from retail and that plenty of potential tenants would covet that space.

“In this age of communications, there’s no limit to these types of facilities,” said Stephan Gordon, vice president at S.L. Nusbaum Realty Co. “There will always be demand for them.”

Demand for class “B” office space is strong on the Peninsula. According to the Old Dominion University Real Estate Center, vacancy for that space was 4.8 percent in 1999, down from 8.3 percent the year before. The average rent has crept up to $11.84 a foot, compared with $11.55 a foot the year before.

Others say that plenty of empty real estate space will need recycling.

“Real estate is cyclical,” said Jerrold France, publisher of Shopping Center Business. “Markets outgrow themselves, and new markets open, but if the location is good, they’ll be very good alternative uses.

“Reach Jennifer Goldblatt at 446-2338 or jgoldbla(AT)pilotonline.com

Illustrations/Photos:
Caption: COLOR PHOTO
AS OFFICE SPACE EXPANDS, SEARS…
PHOTO
MARK P. MITCHELL/The Virginian-Pilot
Where shoppers once mingled in the old Newmarket Fair, workers will
take coffee breaks in Newmarket Center.
GRAPHIC
1975: The $35 million mall opens as the first two-tiered mall in
Tidewater, three miles from Coliseum Mall. It brought the region’s
largest Sears, Roebuck & Co., Miller & Rhoads, and Leggetts
Department Stores.
1987: Patrick Henry Mall opens 15 miles down the road.
1989: Goodman Segar Hogan Inc. bought Newmarket North Mall, acting as
managing general partner for a pension fund, paying $33.9 million for
the project. GSH does a $10 million renovation of the project, adding
a carousel and children’s play area, changing the name to “Newmarket
Fair.”
1989: Miller & Rhoads files for bankruptcy, the company will close
its store the next year. In the next two years, a spate of department
store bankruptcies diminishes potential anchor candidates.
1989: Chesapeake Square Mall opens.
1992: Monitor-Merrimac Memorial Bridge Tunnel opens,
1992: Wilder Management Co. buys Goodman Segar Hogan’s interest in
the mall.
1994: Mall negotiates with Thomas Nelson Community College for about
40 percent of the mall’s space for off campus classes in the mall. No
deal is made. Leggett closes its 125,000 square foot store.
1997: Chapter 7 bankruptcy filing for Newmarket North Associates,
with $22.4 million owed to Aetna Life Insurance Co. Sale to Sans
Holding Corp., the Virginia companies owned by developer Edward
Garcia.
1997: Bell Atlantic Corp. announces a customer service and sales
center in the former Miller & Rhoads.
1999: The cities of Hampton and Newport News take a 2,400 square foot
space of a former specialty clothing retailer. AMSEC LLC moves into
space. Sans changes the name to Newmarket Center.
VP GRAPHIC/MAP
AREA SHOWN: NEWMARKET FAIR

(Copyright 2000)

Advertisements

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Create a free website or blog at WordPress.com.

%d bloggers like this: