That Mall is sick and that Store is dead!

May 22, 2013

“How is Newmarket Fairing?” (February 27, 1994)

Filed under: newmarket fair mall,newspaper clippings — Anita @ 11:57 pm

How Is Newmarket Faring?

Demographic Changes Have Hampton Mall Straining For A Strategy

February 27, 1994|By LISA HUBER Daily Press

HAMPTON — Sandi Staylor’s small shop lasted in Newmarket Fair mall for less than seven months.

Today, the owner of Crystal Vibrations – one of several small stores drawn to Newmarket by innovative leases designed to increase occupancy – says her short venture into the Hampton mall may cause her 5-year-old business to fail.

“The business there at that mall is very bad,” said Staylor, whose store sells rocks, crystals and other New Age items.

Staylor isn’t alone. Although there are some tenants who say their business is doing well, managers of various stores in the mall – from the very large to the very small – say Newmarket Fair isn’t as good a place to do business as it once was because the number of people coming to the mall has declined.

The mall fell victim not only to increased competition from new malls but also to a change in the Peninsula’s demographics that makes it less convenient for people who have money to shop at Newmarket Fair, according to people in the business and a Christopher Newport University expert on local retail business.

“There were many days that I didn’t sell a penny’s worth of merchandise,” Staylor said. “At this point, I’ve been so financially devastated that I don’t know if I’ll be able to continue to operate this little shop.”

By the time she moved back to her original storefront near Hilton Village in November, she said business had been so bad that she wasn’t making enough to pay the rent and was forced to borrow money to pay the utilities.

Many Newmarket Fair retailers like Staylor have opted to close up shop or move to other locations.

About 40 percent of the mall’s retail space is vacant, according to Wilder Management Association, which took over as general partner of the mall’s owner, New Market North Associates, 18 months ago. By comparison, Coliseum Mall’s managers say their vacancy rate is 8 percent; Patrick Henry Mall’s, 3 percent.

Newmarket Fair’s management company declined to provide financial information on the mall’s performance or its merchants’ sales. But for 1994, the Hampton city assessor downgraded the value of the property – including the mall and the surrounding land – from $29.1 million to $21.1 million.

City chief commercial appraiser Al Lynch said his office reduced the taxable value because the large number of vacancies and the lack of shoppers led the city to conclude the mall isn’t worth what it once was.

“I think if you just walk through the mall and take a look, you’ll know why” the city lowered the assessment, Lynch said.

“The Virginia National Guard could practice weekend maneuvers out there, and they wouldn’t step on anyone,” said Robert Coker, a marketing professor at Christopher Newport University who follows the local retail business.

In an attempt to lure tenants to the struggling mall, Wilder Management will work out lease arrangements that include shorter than normal terms and ways for renters to break their lease without penalties.

“We know that we have many areas to improve at Newmarket, and that’s probably an understatement,” said Andrew LaGrega, Wilder’s vice president of leasing.

Wilder Management bought its share of the mall from Goodman Segar Hogan in September 1992 and took over as general partner after the Virginia Beach-based real estate developer and the mall’s limited partner couldn’t agree on a marketing strategy for the facility. Terms of the sale were not released.

The mall’s limited partner, a public pension fund, has never been named.

New Market North Associates bought the 800,000-square-foot mall for $34 milion in 1989 but lost one of its major tenants the following year when Miller & Rhoads closed its 120,000-square-foot anchor store. The Richmond-based chain went out of business six months after filing for bankruptcy in 1989.

Newmarket Fair’s owners spent $9 million on a facelift in 1991 that added dramatic skylights and a carousel, but they have yet to find a new tenant for the space Miller & Rhoads left behind.

The mall, on Mercury Boulevard close to Hampton’s boundary with Newport News, is currently negotiating with three possible tenants to take over parts of that space, said Charles Todd Duff, mall general manager.

Altering the mall to focus on discounted merchandise was the only way Goodman Segar Hogan thought the facility would thrive, said Robert M. Stanton, former Goodman Segar Hogan chairman.

“I think that a traditional mall in that location would have a serious problem,” said Stanton, who left Goodman Segar Hogan when it merged with Armanda/Hoffler Enterprises Inc. last year and started his own real estate investment company.

When the mall opened in 1975, it sat at the center of the Peninsula’s highest income area, Christopher Newport’s Coker said. In the years since, many of of the Peninsula’s higher-income residents have moved north of the Oyster Point area, into York County and Denbigh.

Location wouldn’t have been an issue for an outlet mall because people will travel further to get to a discount center, Stanton said.

Stanton said Goodman Segar Hogan was negotiating with two discount retailers – The Sports Authority and Burlington Coat Factory – to open stores in Newmarket Fair before it sold its interest in the mall.

In 1991 Leggett Stores Inc. converted part of its Newmarket store into the company’s first outlet center, offering discounted merchandise consolidated from other stores in the chain. The retailer later doubled in size the portion of the store set aside for outlet goods.

Despite Leggett’s success in the outlet market, the mall’s limited partner wanted Newmarket to remain a traditional mall. That’s when Goodman Segar Hogan decided to sell its stake, Stanton said.

Coker and retailers with stores in Newmarket Fair say the 19-year-old mall is stuck in a chicken-and-egg dilemma: Without more stores, the number of shoppers won’t grow. Without more shoppers, new stores won’t open there.

Sears, Roebuck and Co. has its only Peninsula store at Newmarket Fair, in a 245,000-square-foot facility that Sears owns. That is the mall’s only draw, Coker said. Without that store, the mall would probably go under, he said.

“Only those shoppers who are Sears-loyal make it” to the mall, Coker said.

A spokeswoman for the Chicago-based retailer declined to comment on individual store performance other than to say 1993 was a good year for the Hampton store.

But Coker predicted that, eventually, Sears will follow in the footsteps of many of Newmarket’s former retailers and move to another location. “I think it’s just a matter of time,” he said, adding a Sears move would devastate the mall.

Leggett, the mall’s other anchor store, also owns its Newmarket location. A spokesman for the family-owned store also declined to comment on store performance.

Many retailers say the 1990 closing of Miller & Rhoads, one of Newmarket’s original anchors, set off a decline for the mall that was hastened by that year’s recession.

That’s when Photo USA, which closed its Newmarket store this month after nine years in the mall, began to see a dramatic drop in sales, said Tom Tanner, company president.

“That store was not making any money,” said Tanner, who bought Roanoke-based Photo USA in January after it declared bankruptcy and its assets were liquidated by the court. As the Photo USA’s new owner, Tanner said, he was not liable for leases signed by the former owner.

LaGrega said Hampton’s decision to cut the assessed value of the mall by 27 percent – shaving $96,000 off its annual property taxes – may be a blessing in disguise for the facility.

“It’s better for us because it makes it easier for us to bring tenants in,” he said.

With less tax to pay, the mall can lower rents and still cover its costs, he said. The cheaper rents may help the struggling mall fill its vacant storefronts, said LaGrega, who declined to say how much Newmarket Fair charges for its retail space.

On average, small retail spaces on the Peninsula rent for anywhere from $6 to $14 a square foot, according to a 1993 Goodman Segar Hogan Hoffler survey of retail space.

Lower rent is one tactic the mall is using to help draw individually-owned stores like Staylor’s. Another is offering short-term leases, LaGrega said. Often, malls require retailers to sign leases that can last for as long as 10 years.

“They were willing to work with new businesses,” said Angie Rowe, co-owner of the International Art Gallery, which opened in the mall in December.

Rowe said she has a six-month lease with the option to negotiate a longer-term lease at the end of that time. The short lease gave her store the opportunity to test the waters in the mall before jumping in with both feet.

So far, she’s happy with the success of her new location.

The mall will negotiate short-term leases of six months to a year and set up leases whose rent is based on the store’s monthly sales, LaGrega said. The mall also reserves the right to terminate a lease if it doesn’t feel the retailer will succeed.

LaGrega says Newmarket’s managers are not willing to haphazardly fill empty storefronts with just any business. Unprofitable stores wouldn’t help the mall any more than vacant storefronts would, he said.

“The worst thing for a landlord is to have a tenants that aren’t doing business,” he said.

COMINGS AND GOINGS

Since Miller & Rhoads went out of business and closed its Newmarket Fair location in January 1990, a variety of other stores have come and gone from the Hampton mall. Many of the stores that closed were part of large, regional or national chains while many of the stores to open are locally-owned, independent retailers. Some of the comings and goings include:

COMING

1994

* Fortune Express (planned)

1993

* International Art Gallery

* Top Dog

* Crystal Vibrations

* Tamika Fashions

* Lee Nails

* Mystic World

* Style Setters

* Extra Innings

* Products of India

1991

* Tilt

GOING

1994

* Photo USA

1993

* Kinney Shoes

* Crystal Vibrations

* Stride Rite Bootery

* Original Great American Cookie

* The Limited

1991

* Casual Corner

* B Dalton Bookseller

* Frederick’s of Hollywood

* Butler’s Shoe Store

* Dutch Maid Donut Ship

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