Local focus makes for a full house at resurgent Eastern Hills Mall - Once-struggling mall nears full occupancy

By Samantha Maziarz-Christmann
The Buffalo News
July 5, 2009
Original Article

A big part of the soundtrack for the recession has been the clanging shut of retail doors, with the growing list of national merchants filing for bankruptcy leaving retail centers struggling to retain occupancy.

But in these tough times, as one display window after another goes dark, the Eastern Hills Mall is bucking that trend by attaining virtually total occupancy.

“It’s refreshing to know that, locally, it’s not just about gates going down, it’s about gates going up,” said Russ Fulton, Eastern Hills Mall’s general manager.

And while several area malls have thrived amid the downturn, Eastern Hills’ long history of high vacancy rates makes its success all the more striking.

Under Simon Property Group’s ownership, the mall limped along at 70 percent occupancy. But six years and $15 million in renovations later, the mall is poised for an occupancy rate of 97 percent.

The mall’s current 8 percent vacancy rate is set to shrink with the impending arrival of its latest national tenant, a youth athletics retailer whose identity is under wraps. Once the deal is inked, the store will fill 60,000 square feet of retail space that most recently housed an indoor automotive showroom for various car dealers.

That will leave just 9,000 square feet of leaseable retail space unoccupied, bringing it to the front of the pack locally.

In 2008, the Walden Galleria stood at 86.98 percent occupancy, while the McKinley Mall in Hamburg was at 89.43 percent, and the Boulevard Mall in Amherst stood at 90.53, according to a roundup by CB Richard Ellis, the most recent comprehensive numbers available.

Working in Eastern Hills’ favor has been its mix of local retailers as well as tried-and-true national and regional favorites, such as the Gap and Bon-Ton.

As malls elsewhere in the nation come crashing down from the heady high of abundant consumer spending and now face the harsh reality of troubled, overly leveraged corporate chains, Eastern Hills has been largely spared.

For example, the mall lost a 3,600-square-foot tenant when S&K Menswear went belly up in May, but that hardly compares to the jarring losses of nationals such as Steve & Barry’s, which abandoned roughly 50,000 square feet at Walden Galleria and sealed the fate of doomed Wheatfield mall The Summit.

In addition, Abercrombie & Fitch recently announced it will close its trendy Ruehl stores in January, after the concept failed to take off. Bachrach Menswear is on its way out, too, following the company’s bankruptcy and current liquidation. Scoring those stores exclusively was a victory for Walden Galleria, but their hasty exits also are leaving lots of empty space at the local retail giant and elsewhere in the country.

“Those are big space users in many super regional centers,” said Fulton, who served as director of marketing at Walden Galleria for roughly 20 years. “While there are many benefits to being the big guy in town and getting the newest concepts, when they fall they fall hard.”

Instead, much of Eastern Hills’ strategy has centered on nurturing local businesses, such as independent fashion boutique Bella Que and children’s toy store Raff and Friends. One of the ways it does that is by offering perks such as free marketing and professionally merchandised display space. Those benefits not only help local independent business owners put their best foot forward, it also makes the retail environment more attractive to potential national tenants — keeping the mall humming and traffic flowing.

“This retail environment has forced creative thinking and that’s being applied at Eastern Hills. Getting warm bodies in the door, that’s what retail is,” said Michael C. Clark, director of retail tenant services of CB Richard Ellis in Buffalo. “Working with tenants is going to help that, as opposed to sitting with dark space.”

That strategy has brought the mall to a retail mix of 70 percent national and 30 percent local tenants, with major chains such as Hot Topic, Victoria’s Secret and Zumiez standing seamlessly alongside local favorites such as Laux Sporting Goods and Pure Integrity Candles.

In another bid for floor traffic, the mall opened a Department of Motor Vehicles branch in April, bringing long lines of potential shoppers to the corridor and enticing convenience store Barrymore’s to open shop across the hall in order to capitalize on it. The mall is also in talks to devote part of its parking lot to an NFTA park and ride location.

Such flexibility is key for regional malls, allowing it to compete with larger retail centers by morphing into exactly what the surrounding community needs and isn’t receiving elsewhere, Clark said. Eastern Hills’ private ownership by the relatively small, New Jersey-based MDC Retail Properties also works in its favor.

“Not being owned by a big group is a benefit,” he said. “It is able to pay attention to detail and foster tenant relations.”

Chuck Breidenbach, managing director for MDC, agreed. “We can look at the property, look at the community and see what needs aren’t being met rather than putting the same chain retail and restaurants in every property across the country,” he said.

A subsidiary of Mountain Development, which bought the mall in 2003 for $17 million, MDC’s portfolio consists primarily of office and industrial space. It owns just one other retail center, the Eastfield Mall in Massachusetts, an 825,000- square-foot regional mall listed as 100 percent occupied.

As a regional mall, Eastern Hills lures shoppers from a smaller surrounding community than malls such as Boulevard Mall and the Fashion Outlets of Niagara Falls, which draw from a larger radius and also lure many Canadian shoppers.

Yet Eastern Hills couldn’t ask to be surrounded by more favorable demographics. The mall is nestled among some of the highest income neighborhoods in Western New York, including the affluent Spaulding Lake housing development.

Also nearby are Sheridan Meadows corporate park and Ingram Micro, as well as several law firms and financial groups. It is that daytime lunch population Fulton hopes to capitalize on with expanded restaurant options planned for construction along the mall’s perimeter.

Add booming national chain development up and down Transit Road and a claimed 60,000 passing cars per day, and you’ve got what Fulton calls, “the perfect storm in a soft economy.”

“I know the power of what is sitting in the backyard at Eastern Hills,” Fulton said. “[Working at Walden Galleria] I spent years trying to get the highest [income] households in the market to drive past it. Now I am here to make sure they stay right here.”

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