Out with the Old Navy and in with ...? Victoria Mall faces changes
Jan. 1, 2011 at 10:03 p.m.
Updated Dec. 31, 2010 at 7:01 p.m.
SOME ADDITIONS TO LA PALMERA MALLFinish Line
ABOUT HULL STOREY GIBSON Owns 18 malls across seven states.
Hull Properties Inc. was established in 1977 and was the predecessor company to Hull/Storey Development, LLC which was formed in 1993.
On Jan. 1, 2008, the company changed its name to Hull Storey Gibson Companies, LLC.
James M. Hull's primary concentration is on the acquisition, development and financial operations of the company's 10.5 million-square-foot retail portfolio.
Barry L. Storey oversees the company's new development activities.
John W. Gibson serves as the company's chief operating officer with responsibilities covering its acquisitions, development, construction, leasing and management operations.
The Old Navy space will not sit idle too long after the store closes, a Victoria Mall manager says.
The clothing retailer, which did not renew its lease with the mall, is expected to be replaced with another national retailer.
This is the first of several expected changes the 675,783-square-foot mall will see in 2011.
Crossroads shoppers have expressed concern about the rash of store closings in 2010. Eleven spaces are now empty at the mall. Additionally, the national retail trend has been toward clustered, stand-alone stores rather than traditionally enclosed malls.
However, John Gibson, a partner with Hull Storey Gibson Companies, the mall's management company, said Victoria's mall remains healthy.
"People see change, and they worry," Gibson said.
Loss of sales and disinterest from the Victoria market is what has driven away Old Navy and others from the mall, Gibson said.
Gibson denied speculation about high rent prices and poor management as causes for the closing.
"A lot of times it's the unknown that becomes so fearful," Gibson said.
OUT WITH THE OLD NAVY
Racks of colorful clothes fill Old Navy, but by February, the store will be another empty space haunting the Victoria Mall walkway.
Farther down from the store is an empty space that used to be Waldenbooks; it now gets lost between two other retail stores.
The mall has seen its share of large retail closures in 2010, including Gap, FYE and the Scoreboard restaurant.
Gibson insists the mall is at good occupancy - a figure he put at 94 percent. That includes anchor stores like JCPenney, Sears and Dillard's. The mall is at 80 percent occupancy, excluding the anchor stores, he said.
"It's part of a natural cycle," Gibson said. "All these stores closing is really a reflection, not on the community and not on the mall, but on the cycle of certain retailers and merchants succeeding and delivering what people want."
Nationally, regional malls, or shopping centers that have more than 300,000 square feet, have seen vacancies increase.
But in the 2010 third quarter term, that is no longer the case, said Ryan Severino, an economist with REIS Inc., which provides analysis on the real estate market.
Regional malls across the board have been lowering asking rent prices, allowing for small retailers to fill up the malls, increasing occupancy, he said.
"Although third quarter results are a welcome break from the recent trend, the outlook for the retail sector remains challenging," he said in an e-mail.
In the case of Old Navy, its lease ended in August, and the mall gave it a grace period and the option of renewal, which it did not take, Gibson said.
Matt Horcha, district manager of the Old Navy, said he could not go into specifics about renewing or any sales information, citing corporate policy.
However, he said, the Victoria market has been remarkable.
"It's certainly something we don't want to do. Victoria customers are incredibly important to us," he said.
Opportunity for expansion in Victoria in the future is a possibility, Horcha said.
However, Gibson countered, if Old Navy had considered becoming a stand-alone business, the store would be ready to open as the mall location readied to close.
Horcha would not comment on whether rent price was a factor in its decision to not renew.
Rent with the mall is based on the profit a business makes. The more profitable the business, the higher the rent, Gibson said.
"People have not left the mall because the rent is too high," he said.
In 2005, renovations and additions were made to the Victoria Mall, allowing for new tenants to move in.
Best Buy and James Avery moved in, tile was replaced with carpet, ceilings were raised, and some lighting and other smaller details were added.
Hull Storey Gibson has continually invested money in the mall since it became its management company about seven years ago, Gibson said.
That investment will continue into 2011 with the some expected announcements. However, Gibson did not comment on how much more of an investment and what other changes were to come besides the store taking Old Navy's place.
"What's going to happen to the mall? That's the real question," Gibson said.
IN WITH THE NEW
A mall neighbor to the south of Victoria decided it needed a facelift to recapture its market.
La Palmera Shopping Center, formerly Padre Staples Mall, in Corpus Christi, completed a $50 million two-year renovation project to its existing structure in June.
Since the completion, the mall has added 29 retailers and increased its visitor volume from 640,000 visitors in December 2009 to 1.2 million in December 2010.
"The only reason we did it was because we knew it would be a domino effect and attract new retailers to the market," said Fred Walters, La Palmera general manager.
Trademark Property, the mall's management company, allocated the $50 million according to feedback the company received from the community during scheduled focus groups.
Participants wanted natural light, better seating and a resort-like atmosphere; and all of those needs were met, Walters said.
Focus groups have not been done in Victoria, Gibson said.
The economic climate in Victoria differs from Corpus Christi, so any major overhaul seems remote, he said.
"We don't buy into the idea that the consumer is going to come back and spend money like it's 1999," he said.
This doesn't mean change is inconceivable.
Economic environment and demographics all play factors in successful renovations and flourishing businesses, Walters agreed.
Many retailers choose based on market demographics.
Still, renovations and investments made at malls is "absolutely critical" in bringing in more retailers and consumers, he said.
"It's going to be different for every single retailer," he said. "One of the reasons tenants leave is because of low foot traffic and low sales. You have to have a plan. You can't just go about it fragmented."
Victoria Mall is not following in the footsteps of La Palmera. At least not now.
Gibson has seen malls with much-needed renovations that still have all the major retailers.
It all goes back to having the right market demographic.
"I can assure you, we work hard every day introducing Victoria to retailers," he said. "We're going to invest in it in a smart way. We think people will be pleased with it."