‘Haves and have-nots’
Like many other shopping centers across the U.S., Greenspoint Mall is challenged by a retail divide
ONLY echoes filled the Dillard’s corridor at Greenspoint Mall during one of the year’s busiest shopping weekends.
Eight vacant storefronts lined the wide hallway, which remained mostly quiet on the Sunday after Thanksgiving. The few shoppers who ventured past the darkened display windows found the doors of the department store locked, forcing them to use an outdoor entrance. Too much theft, an associate said.
Like hundreds of other aging shop-ping meccas across the country, Greenspoint has failed to evolve in a Darwinian retail environment that demands rapid adaptation, especially during the cutthroat holiday season. As
“Malls follow what we in marketing call the product life cycle. Products will die unless they continue to change.” Richard Feinberg, Purdue University
e-commerce sales rise and consumer expectations shift, its struggles illustrate the threat of obsolescence plaguing lower-tier malls in Houston and elsewhere.
“Malls are bifurcated into the haves and have-nots,” said Alan Hassenflu, principal and CEO at Houston-based Fidelis Realty Partners. “The malls in the have-not space do not have ownership that continued to reinvent the mall."
Greenspoint, at the intersection of Interstate 45 North and Beltway 8, is a shadow of the retail hub it once was, posing a challenge to developers looking to reinvent it.
It’s far from the only Houston-area mall that has struggled to retain tenants and shoppers, but it shows some of the most obvious signs of decline. Many spaces are empty and gated, while others sell much of the same merchandise: costume jewelry, cheap dresses, patterned suits and sportswear.
Shuttered department stores have left vacant three cavernous anchor spaces there, and those that remain are different than ones shoppers could find elsewhere. The Dillard’s and Palais Royal are no-frills clearance stores, the end of the line for final-sale items. The Macy’s lacks the packed display cases and intricate ar-rangements of other locations. It wasn't always like this. The mall, once anchored by Foley's, Montgomery Ward and other department stores of their day, opened
40 years ago as one of the largest shopping centers in the region. At more than 1 million square feet, it featured indoor landscaping and offered north Houston suburbanites a convenient location at which to buy nearly anything.
Greg Simpson, president of the North Houston District, formerly the Greenspoint District, remembers the “coming soon” sign heralding the construction of the mall and his mother’s eager anticipation. He saw the first “Star Wars” film there, in 1977, in a standing-room only showing.
“Everybody was there,” he said. “I remember sitting on the floor because it was so crowded.”
Now, the parking lot is empty enough to host a traveling carnival, the kind that often serves as a temporary attraction in places with little commercial activity. Called Wright’s Amusements, it arrived in midNovember and departed earlier this month. Neighborhood issues
The mall’s decline isn’t attributable solely to changes in the retail industry. In the 1990s, several high-profile shooting deaths in the area earned it a nickname of “Gunspoint” that it hasn’t since been able to shake. Surrounding property values fell as many residents relocated to other suburban areas.
“People moved farther north and west, and that impacted it,” said Ed Wulfe, chairman and CEO of commercial real estate firm Wulfe & Co.
Meanwhile, competing malls, including Willowbrook, Deerbrook and The Woodlands, siphoned off shoppers. And Exxon Mobil Corp. recently relocated thousands of employees from the Greenspoint area to a sprawling campus closer to The Woodlands.
The shifts posed challenges for all retailers in that area. Even Target closed a store there, around the time JCPenney pulled out of the mall in the late 1990s.
More recently, Greenspoint’s problems have compounded. Malls across the spectrum have been challenged to retain customers as department stores lose some of their luster to e-commerce sites and brick-and-mortar stores such as T.J. Maxx and Marshalls.
So-called off-price stores, which gained substantial market share after the recession, have continued their momentum since then. AMoody’s report earlier this year forecasted the sector’s revenue to grow 6 to 8 percent during the next five years.
“Really, the losers in all of that were the large-mall anchor stores,” Hassenflu said. “These malls, especially on the periphery, started to feel the pinch of all of these off-price stores locating around them.” E-commerce
E-commerce sales, too, have risen at the expense of mall traffic. Adobe Digital Insights reported a recordsetting $3.34 billion spent online this year on Black Friday, once a heyday for malls across the country. That total, an 18 percent increase over last year, further softened the traditional instore rush and again demonstrated an ongoing shift in shopping habits.
The changes continue to feed the growth of the nation’s leading online retailer, Amazon.com. It entered the holiday season after reporting nearly 29 percent year-over-year revenue growth in the third quarter, and Moody’s anticipates its sales will climb at least another 22 percent this quarter.
To support its burgeoning e-commerce empire, Amazon is building its seventh distribution facility in Texas just a few miles southwest of Greenspoint Mall. It’s expected to open late next year.
“It is ironic, it really is,” Wulfe said. “It is pretty telling of the difference of where weare today in terms of retailing and how it’s happening.” ‘Vicious cycle’
All of the factors that eroded Greenspoint’s appeal — population shifts, market changes and competition — can result in a mall “death spiral,” according to real estate analytics company Green Street Advisors. The firm, which tracks malls nationwide, noted in its 2016 outlook that declining sales result in fewer tenants that ultimately attract fewer visitors, a “vicious cycle” that can hasten a mall’s obsolescence. Others struggle
A similar fate befell Northwest Mall, one of the lowest-performing in the area, after it lost several anchor tenants, suffered damages during Hurricane Ike and relinquished some of its parking lot space to the Texas Department of Transportation.
Nowits operator, Levcor, lists on its site a plan to turn the property into a mixedused development anchored by a grocery store.
Baytown’s San Jacinto Mall for years struggled with declining foot traffic and other challenges that cost it a number of tenants. Last year, Fidelis purchased it from Triyar Cannon Group, the same company that operates Greenspoint, with plans to redevelop it into an open-air shopping center covering more than a million square feet.
“These projects are not for the faint of heart,” Hassenflu said. “The facility itself was never maintained and renovated. Now we’re in a situation where the old mall is kind of a dinosaur.”
Hundreds of other oncepopular malls have faced similar challenges in the decades since they opened. Many of them, confined by location, tenant lease terms and budgetary limitations, stagnated as customer preferences changed, said Richard Feinberg, professor of retail management at Purdue University.
“They outlived their usefulness in a given location,” he said. “I’m sure some of these developers would like to pick up their malls and movethem, but you can’t do that.”
Of the 1,100 malls Green Street tracks, more than 300 have low sales productivity, declining occupancy rates and anchor vacancies, putting them at risk of closure in the coming years, according to the firm. Like Greenspoint, many have come to offer little other than commodified retail. Some malls still thrive
In contrast, thriving malls tend to offer more “experiential” and luxury retail, according to Green Street.
Many have undergone renovations in recent years to meet consumer demand for open-air shopping spaces complete with popular restaurants and entertainment venues.
“Malls follow what we in marketing call the product life cycle,” Feinberg said. “Products will die unless they continue to change.”
Some of Houston’s most successful malls have continually revamped their offerings and appearances in recent years.
The Galleria, operated by Simon, is in the midst of a $250 million renovation that will add a number of high-end retailers and restaurants as part of a luxury expansion near its new Saks Fifth Avenue store.
In October, General Growth Properties completed a 600,000-squarefoot expansion of Baybrook Mall that includes an openair shopping area with restaurants, retail and entertainment, as well as a power center with Dick’s Sporting Goods, REI and other bigbox retailers. Always changing
“We continue to evolve,” said Scott Sutherland, GGP’s vice president of asset management. “It takes a vision of reinvestment and knowing what to add.”
Meanwhile, Triyar has no plans to resuscitate Greenspoint. The company put it up for sale earlier this year and declined to comment on it.
The building is being marketed for a major redevelopment, though perhaps not as a retail space. Colliers International lists it as an opportunity to turn as much as 120 acres of land into various types of commercial or mixed-use properties.
“What happens to Greenspoint is up for grabs,” Wulfe said. “But I doubt any retail will stay there over the long haul.”