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Unusual mall anchor tenants change mix

/ Source: East Bay Business Times

Senior citizen centers. Health clubs. Libraries. Movie theaters. Health care centers. Police substations. Big-box discount stores. Even "Amber Alert" posting centers.

Maybe a gas tank or two worth of traveling to visit all those places? Not with today's shopping malls.

Responding to economic and demographic changes, shopping centers are depending less on a shrinking pool of traditional department stores, for example, and bringing in such untraditional anchor tenants as big-box discount stores and health clubs.

And while senior centers and libraries don't generate sales, they do pay rent and generate foot traffic for businesses that do.

"The role of an anchor is to draw customers to a center. So when circumstances change, you have to look for uses that continue to draw people," said Patrice Duker, spokeswoman for the International Council of Shopping Centers. "One of the biggest changes today is that big-box discount stores like Target and Wal-Mart are moving into malls. Customers are still going to regional malls, but not as often as they once did. And bringing in community facilities may persuade more people to visit more often."

That would be a welcome reversal of fortune for retailers. According to studies by the U.S. Department of Commerce, the average number of shopping center visits has dropped 50 percent since the early 1990s. As some weaker anchors, such as Montgomery Ward and possibly Mervyn's, fall by the wayside and the industry consolidates, shopping center operators are grasping for new strategies.

One of them is community outreach that may not directly make money. At Hayward's Southland Mall, a branch of the city's senior citizen's center attracts hundreds of people a month to classes and activities.

Bayfair Mall has a San Leandro Police Department substation.

After losing its major anchors, JCPenney and Mervyn's, more than a decade ago, Eastmont Town Center in East Oakland transformed itself into a giant community center, featuring a senior center, library, technology education center, health clinic, government offices and an office of the African American Chamber of Commerce. The mix includes a handful of retail shops and restaurants.

Newark's NewPark Mall, a midrange regional center anchored by Macy's, Sears, JCPenney and Mervyn's, will strengthen its community bond by posting alerts for missing children — known as "Amber Alerts" — in several heavily trafficked areas of the mall.

Not all of the changes are quite as civic-minded, however. Other types of newfangled anchors are more traditional for-profit concerns but ones that have not been found in regional shopping malls until the past few years. The newest local example is a 34,000-square-foot Gold's Gym that has transformed a once-dark storage area in Southland Mall's lower level. It joined 24 Hour Fitness clubs at Hilltop mall in Richmond and Sunvalley Shopping Center in Concord as places where shoppers can counteract the effects of too many visits to the food court.

"This has been a great location with lots of foot traffic from the mall," said Marc Denola, owner of the Gold's Gym franchise at Southland. "I think a facility like ours persuades more people to come to the mall, since the spouse of a shopper may tag along to come and work out. From our point of view, Southland is a perfect location, since it has great access to the freeway and lots of foot traffic. And since our entrance is an external one, we don't have to observe traditional mall hours."

Enticing an unusual tenant such as Gold's Gym — the world's largest chain of health clubs with 675 locations worldwide — is a way to "maintain interest among our shoppers and keep us competitive," said Gayle Speare, Southland's marketing director.

"Our parent company (General Growth Properties) has opened a Harley-Davidson dealership at one of its malls in Montana and is adding Bass Pro Shop stores to other centers," Speare said. "There's an increasing mix of entertainment-oriented and community tenants that you must have along with retail to retain your competitive edge."

Retail is an ever-changing world swept by new trends, Speare said. During the past decade, regional malls have added dozens of new youth-oriented specialty apparel stores that cater to affluent and trendy Generation Y or "baby boom echo" shoppers. But they also have such stores as Chico's and J. Jill that appeal to middle-aged women and entertainment venues that beckon to kids.

"Since the average number of visits has been dropping, we want to attract the entire family to come along when those visits occur," she said.

Senior centers may not add directly to a mall's sales-per-square-foot statistics, but members patronize restaurants and buy gifts for kids and grandkids at specialty shops and department stores, Speare said.

Will Ander, a Chicago-based retail consultant, said upscale centers should have a relatively easy time retaining traditional anchors such as Macy's, Nordstrom and Neiman Marcus. Midrange malls that depend on more embattled retailers such as Sears and JCPenney will have to be more creative.

"I think those stores will still be around, but maybe not as many," Ander said. "Midrange malls are looking at all kinds of nontraditional tenants and anchors, including The Home Depot and EXPO Design Center. Discounters like Wal-Mart may draw a lot of shoppers, but they tend not to have much 'rub-off effect' on other stores. Target is probably a bit more acceptable in that regard, as are stores like Kohl's."

It's unlikely regional malls will return to their halcyon days of the 1960s, '70s and '80s anytime soon, in Ander's view.

"You're seeing all kinds of community facilities, health clubs and government offices, especially in the regional type 'B' malls," he said. "The classical regional mall is really past its prime."

Others acknowledge the transformation but dispute any predictions for the early demise of regional shopping centers.

"Because of (General Growth's) sheer size, we have relationships with all of the major retailers, so we're not too worried about the future," Southland's Speare said. "Consumers still demand that we have department stores. Like a lot of industries, department stores are undergoing consolidation. There may be some pain, but in the end, it will strengthen the whole retail industry."