Mall management says vacancies all part of life cycle, change is coming
Aug. 3, 2010 at 3:03 a.m.
LEARN MOREMore about Hull Storey Gibson Companies
Based in Augusta, Ga.
Retail portfolio spans 10.5 million square feet
Manages 17 mall properties, as well as other freestanding and strip sites
The Victoria Mall is a different place than just a few months back. With stores such as Gap and Waldenbooks closing, the building boasts a few more empty spaces.
But it's all part of a cycle and change is coming, said John Gibson, a partner with the mall's management company, Hull Storey Gibson Companies.
"When Grandma dies, it ain't the end of the world," he said, explaining new babies are born and bring change. "That's part of the life cycle."
Here, Gibson shares his views on the local shopping center.
Q: We've seen several stores close, the most recent being Gap. Why is that?
A: Consumers are fickle and demanding. A person's tastes today aren't what they were four years ago, so stores must adapt. Gap was wonderful but, for whatever reason, was not able to deliver what customers in Victoria wanted. It's a lot like the show "Survivor." People vote daily with their pocketbooks and they voted Gap off the island. It's the same with FYE. People decided to buy music and movies online.
Q: Are stores closing nationwide?
A: Retail is in transition. It expanded to an unsustainable point and is now contracting. I believe we'll see successful companies consolidate into successful shopping centers. I wouldn't say Victoria is over-retailed, though. It's really almost achieved a balance, which is good.
Q: How did the nation get to the point where it has too many retailers?
A: It was brought on when the federal government cut interest rates. Ordinary citizens borrowed against their houses and opened credit lines, which they used to purchase cars, refrigerators and other items. Increased sales spurred companies to add retail sites and created an unsustainable foundation. Texas has been more fortunate than other states, however.
Q: We've heard Old Navy might close. Is it true?
A: Old Navy is a Gap company and we've been in discussions. They'll decide whether they can compete in Victoria's ultra-competitive market. If they decide they can't, we've had a pleasant, profitable relationship with them and it's a great space we know will go to another retailer who can give shoppers what they want. Whatever the decision, it will be good news for Victoria.
Q: People say increased rental rates pushed stores out. Is that the case?
A: Rents are not going up in this market or in the retail industry in general. It's more competitive now than ever. Retailers pay rent based on a percentage of their sales. Nobody's leaving because rent is too high.
Q: Are other retailers inside the mall faring well?
A: We've identified a number of tenants succeeding in the local market. Sales are through the roof at The Buckle, for instance, and American Eagle and Aeropostale are both doing very well. JC Penney is getting ready to spend a significant amount of money to upgrade. Stores that offer clothing, shoes and services tend to do well in Victoria.
Q: What will we see in the mall's future?
A: In 2011, we expect to start another renovation. It's still in its planning stages, so we don't have details yet. I-Scream, a new ice cream shop, is on its way in the near future and we expect to bring in some larger retailers, too.
Q: It sounds like you aren't concerned about the mall's situation.
A: We're not worried. It's all part of the life cycle. This is a big mall for a market this size and, over the next 18 months, we expect the occupancy rate to reach 90 percent. I think the mall will be here 50 years from now.