A good friend of mine said:
“Westcor is raising rent to many places in the Gateway Mall. As a result, Barnes & Noble, Macayo’s, Celtic Crossing, Wigwam and more will be closing.”
That same friend told me that Westcor was tripling the rent for Celtic Crossing. This is very unusual as the commercial real estate market is facing real challenges and very few owners have the confidence to raise rents, let alone triple them.
So what is really going on? When you triple someone’s rent in a bad economy, you are telling them you want their space.
Digging for answers
If you visit the Westcor web site, you find that Westcor is a subsidiary of Macerich (they acquired Westcor in 2002). If you visit the Macerich web site, and dig around a little you will find some interesting information. Macerich has a focus and development and redevelopment of malls. The latter is the operative terms when looking at the future of the Prescott Gateway Mall.
I do not know what the current vacancy factor is at the Gateway Mall, but a quick walk around the mall shows 21 empty spaces inside and lots more outside in the Village Shops area. And then we have the recent decision to drastically raise rents. That suggested to me that Macerich is planning a redevelopment/rebranding of the Prescott Gateway Mall.
Their 2010 Annual Report lists occupancy at 88.7%; however, it has to be significantly lower than that by now. Just look at these pictures of twenty-one (21) vacancies inside the mall (not counting the vacancies outside in the Village Shops, such as Honey Baked Ham).
What the future of the Gateway Mall may be
Digging further through the Macerich web site I found their news releases. Of particular interest is the July 26, 2011 news release: Macerich Announces the Acquisiton (sic) of Fashion Outlets of Niagara Falls. You can use the link to read the entire release; however, here is what I consider the crucial excerpts:
“The enclosed center’s shop tenant sales per square foot are approximately $650. The center is nearly fully occupied and enjoys a list of tenants waiting for space, leading Macerich to explore options for expansion of the center.”
“Commenting on the acquisition, Edward Coppola, President of Macerich said “We are delighted to have acquired one of the top fashion outlet centers in the country. This initial entry into the fashion outlet business clearly illustrates our intention to expand our footprint in this retail sector well beyond the development of a new outlet center in Scottsdale, Arizona that we announced in April. This center has had very strong sales increases over the past five years and we expect that trend to continue. The center ranks as one of the most productive outlet centers in the country and is a great addition to our high quality portfolio.””
So my conclusion is that we should be ready for a redevelopment/rebranding the Prescott Gateway Mall, possibly as the Fashion Outlets of Prescott.
The following have already closed in 2011:
- Anchor Blue
- Honey Baked Ham Co.
- Raskin’s Jewelers
- The Children’s Place
- Sleep Number Store By Select Comfort
The following will be closing at the end of 2011:
- Barnes and Noble, 25,200 square.
- Sonic restaurant (in the Food Court).
- Gateway Branch of the Prescott Library
From an artile in the December 14, 2011 edition of the Wall Street Journal:
“Green Street Advisors predicts that about 10% of the roughly 1,100 malls in the U.S. will either be dead within the next ten years or find new uses as offices or classrooms if vacancies and retail sales don’t improve, according to Cedrik Lachance, managing director at Green Street.”
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Jack D. Wilson first visited Prescott in 1995 and has been a resident since 2000. He took a sojourn into politics and was the mayor of Prescott Arizona from Nov. 2007 – Nov. 2009. He now writes a couple of blogs among his many activities.