Closings threaten vibrancy of malls
Sears, Elder-Beerman vacancies could hurt as holidays approach.
The closure of Elder-Beerman stores and soon Sears locations right before the busy holiday season threatens the vibrancy of area malls.
But experts who analyze the retail industry say malls like the Mall at Fairfield Commons and the Dayton Mall should weather the storm and the department store closures will eventually be good for the shopping destinations.
“The top 50 mall owners in the country were dying to get Sears out of the mall, so they’re thrilled,” Corey Bialow, chief executive at Bialow Real Estate LLC, told the Wall Street Journal. “Where it’s
going to hurt most [is] at malls that are already struggling. Sears is still a relevant brand in the heartland, and closures there will inevitably hurt.”
The day Sears announced it would close at Fairfield Commons, the mall already had tenants secured. It plans to break the 127,000 square- foot, two-story box into two stores. The top store will host The Room Place furniture store while the bottom will be an entertainment con- cept with food, bowling and arcade games.
The Beavercreek mall also has knocked down an old Elder-Beerman furniture store to create outward facing restaurants.
“When there is a store closing, it provides us with an opportunity to bring new and interesting products and services to the centers,” said Kristie Miller, regional manager for Washington Prime Group, which owns both malls. “We continue to focus on delivering the best expe- rience for our guests and both centers offer an abundant mix of retail, dining and lifestyle uses.”
The loss of the stores will still lower some foot traffic and will leave giant holes in the malls before Christmas.
At both the Mall at Fair- field Commons in Beaver- creek and the Dayton Mall in Miami Twp., the combined Elder-Beerman and Sears boxes make up more than 26 percent of total gross leas- able area. The Elder-Beerman stores are already closed, with Sears at the Dayton Mall expected to shut down in early November and the Beavercreek Sears store set to close in early December.
When the stores close, a total 667,260 square feet will be left vacant at the two malls —a combined total of nearly 2.5 million square feet.
While both malls report 95 percent occupancy, that takes into account only small retail stores less than 10,000 square feet, not department store anchors struggling to keep up as shopping habits change. Those boxes are often not owned by malls, — the case at the Dayton Mall — causing delays when trying to refill spaces.
“The industry is certainly undergoing a transformation, and you’re seeing companies that maybe haven’t adapted as quickly are struggling,” said Ohio Retail Merchants spokesman Alex Boehnke.
But he said consumer sentiment remains high despite recent stock market down- turns. The National Retail Federation forecasts that hol- iday sales will jump between 4.3 percent and 4.8 percent this year. While sales may shift around to other shopping centers that don’t have the same concerns, retailers will still have a good holiday, Boehnke said.
“Having a big vacancy come Black Friday and the holidays is not a good thing, but I guess the silver lining is that a lot of the sales are going to transfer to JCPenney and Macy’s,” said Scott Saddlemire, principal of Onsite Retail Group, a Cincinnati-based commercial real estate company that finds properties for retail companies in the Dayton market.
The same thing happened in the electronics market when hhgregg went out of business and Best Buy sawa boost in sales, he said.
Closures of department stores also eliminate highly trafficked entrances, especially at the Dayton Mall where major entrances on both the east and west sides will be vacant.
Saddlemire said traffic will still flow through the malls, but it will be different, with more customers entering near other anchors. The stores near those entrances are likely to see more sales, contrary to the decline stores will see at the ends of wings without anchors.
“The foot traffic is going to decrease, and the foot traffic is what makes indoor malls work,” Saddlemire said.
But malls in the past have used vacant anchors as temporary spaces during busy holiday shopping seasons to keep a closer to normal flow of traffic, Saddlemire said.
One example is the Spirit Halloween stores taking over vacant storefronts for a temporary period, Boehnke said.
“There’s going to be others that might have a similar business model,” he said. “Maybe if its during the Christmas season, a pop-up type holiday store offering gift wrapping, things like that . ... There are options.”
Neither mall has temporary plans at this time, but owners want to fill those voids permanently, which is difficult when few retailers are looking for department storesized spaces and mall vacancies have hit a seven-year high at 9.1 percent, according to a recent study by Reis.
Washington Prime has filled some of its closures with retailers not traditional to the region. It picked up Ross Dress For Less recently at the Dayton Mall in the hhgregg location that had been vacant since last year.
At the Mall at Fairfield Commons and the Dayton Mall, the Elder-Beerman and Sears boxes make up more than a quarter of the area available to lease.