Area malls welcome new retailers, more on the way
Shopping malls across the country were hit hard by the recession as vacancy rates skyrocketed, but as the economy improves, there are fewer empty store fronts in the indoor retail meccas, and area malls seem to be following the trend.
Reis Inc., a provider of commercial real estate performance information and analysis, has reported that regional mall vacancy rates across the nation are on the decline, falling from 8.9 percent at the end of the second quarter to 8.7 percent in the third quarter.
“We started to see big jumps in vacancy rates in 2008, but it didn’t peak until 2011,” said Brad Doremus, senior economics analyst at Reis. “The lowest was 5.1 percent to the high 5s between 2005 and 2008, but in the second quarter of 2008, it jumped to 6.3 percent. The highest was 9.4 percent in the third quarter of 2011.”
Representatives of the Westfield Connecticut Post mall in Milford, the Westfield Trumbull mall in Trumbull, Stamford Town Center mall in Stamford and Danbury Fair mall declined to disclose their vacancy rates, but all four said they are seeing an upswing in store openings.
“Things are looking good. People are out and shopping. The economy is starting to rebound,” said Amy Daniels, marketing director at the Westfield Connecticut Post.
Noting the mall, the largest in state at 1.3 million square feet, now has about 160 retailers, she said that Alta Beauty opened Oct. 12, and Ten Asian Bistro and LA Fitness will open in November. Forever 21, which is in space temporarily, will open a two-level store in December.
“We’re working on a number of deals for 2013,” Daniels said.
Bryan Gaus, senior general manager of Westfield Trumbull, said several retailers have recently opened or plan to open, including Lush, The Limited, Sephora, PS by Aeropostale, Crazy 8, Forever 21 and Ten Asian Bistro.
He credited much of the interest by retailers to the mall’s $42 million renovation in 2010.
“We’ve seen some great progress. We’re optimistic about the holiday season,” Gaus said.
Like his peers, Gaus would not comment on his vacancy rate, but referred to a Westfield Group half-year report issued in August that said its U.S. portfolio was 92.7 percent leased.
The Stamford Town Center, a Taubman property, also has seen an influx of retailers in the past few months and expects to welcome L’Occitane en Provence soon.
“They do an amazing job with their soaps and hand lotions,” said general manager Meredith Keeler, who took the job at the 140-store mall in early May. “We’ve had a very strong year of leasing. The way leasing works, it’s a continual conversation. Chico’s, Teavana and the Art of Shaving all joined us in April, and Plan B Burger Bar opened at the beginning of August.”
Management of the Danbury Fair mall, a Macerich Co., property with more than 180 stores, also has seen an uptick in leasing activity with the expected arrival of Rocky Mountain Chocolate Factory in late October and the coming of L.L. Bean, Microsoft, Vera Bradley, Lucky Brand Jeans and Carmen Steffens in the past several months.
“Just this year, we’ve opened stores that have strong regional appeal. Our occupancy rate has been very strong,” said marketing manager Melissa Eigen, declining to disclose a figure.
The mall’s location in northern Fairfield County is attractive to retailers because it draws shoppers from New York state as well as that area.
“We serve a dual market,” Eigen said.
As the economy slowly improves, more retailers are looking for places where they can expand and improve their revenue, said Steve Blank, a senior fellow with the Urban Land Institute.
“They’re looking at markets where they are not represented,” he said, commenting that indoor malls are still where many high-end retailers and department stores want to be. “If you’re a retailer, you have to go where the shoppers are.”
Mall occupancy at “A” malls and their Tier 1 developers, such as Simon, Taubman, General Growth, Westfield and Macerich, has been on the rise for nearly two years, said Craig Johnson, president of Customer Growth Partners, a New Canaan-based consumer and retail consulting firm.
“Many `B’ and most `C’ malls are still challenged by high vacancy rates, particularly when their owners are second-tier players or privately held developers with limited access to the capital needed to refurbish long-aging malls,” he said. “But at least in many `A’ malls, developers, after many years, are beginning to reach positive re-lease spreads — the difference between the net rents achieved from new tenants versus what was paid by the old tenants they replaced.”
Malls in the “A” category typically have revenue of $500 per square foot and up, while “B” category malls are in the $375 to $500 per square foot range, said Jeff Green, president and chief executive officer of Jeff Green Partners, an adviser to retail property owners and developers.
He said he would consider the malls in Stamford, Milford and Trumbull “B-plus” malls and Danbury an “A” mall.
While Stamford Town Center became more inviting with the reconstruction of its entrance with various restaurants, it still is challenged by its multi-story layout, Green said.
“There are still people who will bypass it to shop at the hot streets of Westport, New Canaan and Greenwich,” he said. “The Connecticut Post mall and Trumbull are very stable malls. Danbury has really upgraded its tenants, and really succeeded in taking it up a notch in terms of quality.”