Shopping malls weathering the economic storm

“Shopping mall managers hate to see boarded-up stores,” said Scott Decost, who manages the Fox Run Mall in Newington.

Several stores at the mall, including Wilson’s Leather, have either closed or are about to do so. Decost also conceded that it takes longer to replace those tenants than it used to.

“The time period has elongated,” Decost said. “Putting together a deal for a lease has lengthened from an average of a year to a year and half,” he added.

According to the Urban Land Institute, a research and educational nonprofit organization based in Washington, D.C., regional mall store vacancies average 20 percent nationwide.

The Fox Run Mall in Newington – whose occupancy rate is currently 81 percent — is one of several contacted by New Hampshire Business Review to assess the current impact of the soft economy on their operations in the Granite State.

According to Decost, the impending closing of Wilson’s Leather is part of a nationwide corporate decision to shutter some 260 stores. But another national chain, Victoria’s Secret, is actually expanding at the Fox Run Mall.

“Everything is cyclical, but nothing seems to me to indicate an economic downturn,” said Decost.

Decost, who said he’s not seeing a dramatic downturn in customer visits, admitted that foot traffic has been “more modest than at other times. However, I am seeing healthy weekend traffic. How much that traffic translates into sales isn’t known yet.”

‘Slow but steady’

On the other side of the state, Lars Carlson serves as director of marketing for Colony Hill Marketplace and the Center at Keene. Both are owned by the Mayo Group, based in Boston, a company that owns commercial properties in New Hampshire, Maine and Massachusetts.

Some of those holdings, he said, include warehouse and office space, making it difficult to pinpoint the exact vacancy rate at the two shopping centers in Keene.

While Carlson said that there have been some stores vacating those shopping centers, he also pointed out that they are being steadily replaced.

“We’ve put in five new tenants in the last seven months,” he said. “We’re currently in negotiations with three or four major tenants to remain, and two or three new tenants who are looking to either relocate businesses or start new businesses in those facilities.”

As far as the replacement of vacancies in the Keene shopping centers, Carlson indicated that his company’s strategy has resulted in a concerted effort in the last two quarters to fill those empty spaces — a process he said has “gone fairly well, I would say.”

As for consumer traffic, Carlson characterized the most recent Christmas holiday season as “mixed,” with some stores doing better than others.

“I think, by and large, we see slow but steady growth across the board for the upcoming year,” he said.

Simon Property Group, based in Indianapolis, owns three major New Hampshire shopping malls — The Mall of New Hampshire in Manchester, Pheasant Lane Mall in Nashua, and The Mall at Rockingham Park in Salem.

Deb Stone, area marketing manager for all three facilities, said that the vacancy rate at those malls is lower than the national average, with most spaces occupied in the three malls.

“I know that it is in the low 90s,” she said of the malls’ occupancy rate. “It’s typical for a number of stores to turn over every year. And, we’re always looking for the malls to stay fresh and to have new concepts, and for the mix to stay fresh.”

At the same time, she agreed with Fox Run Mall’s Decost that putting together deals to fill vacancies have taken longer in recent times.

“We know when vacancies come up and we work on those ahead of time, whether it’s a renewal for that particular tenant or whether it’s a new tenant that wants to come into the property. It takes a long time to negotiate the bigger deals, but we work on those a long time in advance.”

Stone also said that any vacant stores can be filled with temporary tenants.

“It’s an incubation process for either a new concept, or somebody who wants to get into the retail business. It’s an opportunity for them to get their feet wet, and try out their business on a temporary basis.”

Stone pointed out that the location of the three malls actually enhances the ability of the malls to retain shoppers.

“I think southern New Hampshire is doing OK,” she said. The two properties on the Massachusetts border, Pheasant Lane and The Mall at Rockingham Park, enjoy traffic from both sides of the border. The Mall of New Hampshire gets a surprising number of shoppers from Vermont. Shopping at the malls, she said, has been steady, with a slight increase seen at the Mall of New Hampshire.

One New Hampshire shopping mall that is continuing to enjoy success is in the Upper Valley. The Powerhouse Mall in Lebanon is nearly 100 percent occupied, according to manager Sarah Luhman, who pointed out that just one store was to vacate its space at the end of March.

While just beginning to market the empty space, Luhman said it is difficult to tell whether the economy will be a factor in filling empty store space. “I feel that there is still demand for good retail/consumer service space in the current market. Lebanon is the retail hub of the Upper Valley.”

Luhman also said that her mall has been experiencing good consumer foot traffic. “Lebanon is one of the few cities that remains ‘under-stored,’ and with the financial stability of Dartmouth College and the ever-expanding Dartmouth Hitchcock Medical Center, we think we’ll be fine.”