Wednesday, December 9, 2009
BY CAROL FLETCHER
The Record
STAFF WRITER
The Meadtown Shopping Center in Kinnelon has seen enough turnover to reflect the recession's impact on the retail industry.
The departure of the Rag Shop in 2007 left a 16,100-square-foot vacancy that was followed by the loss of stores from other chains — Marty's Shoes, ice cream vendor Cold Stone Creamery, Ritz Camera's Shop Inc. and the local chain Falls View Grill. A Blimpie's sandwich store also vacated its space adjacent to the mall.
Such vacancies by national and local chains at Meadtown and other strip malls in northern New Jersey are leading to concessions by landlords and opportunities for small businesses to occupy space that has been out of their reach.
Retail vacancy rates for North and Central Jersey were 8.2 percent in August, about three percentage points higher than a year ago, though still below a national average that has been as high as 15 percent, said Chuck Lanyard, president of New Jersey's largest retail brokerage firm The Goldstein Group, quoting from his agency's most recent report.
"With that percent, landlords are taking non-traditional tenants that they normally wouldn't," said Lanyard.
Meadtown's small businesses such as Kinnelon Bagel and Kataw Jewelers, a Hallmark cards and gifts independent franchise, and other chains have survived. With new neighbors moving in, the remaining businesses are cautiously optimistic a turnaround is on the horizon.
"Business is starting to show signs of improvement," said Bob Sterenson, who owns Lynne's Hallmark Shop with his wife, Lynne. "But I don't know if things have improved or just stopped getting worse."
Things took an optimistic turn recently when pet-store chain Petco took over The Rag Shop space and the South Beach Tanning Spa LLC took the Cold Stone Creamery site in late November.
Earlier this year, Meadtown got additional traffic from new tenants in the adjoining strip mall that shares the parking lot — the Butler Bowl Plaza. The New York Sports Club and the Wayne Pharmacy and Surgical Supply moved in and a new hair salon/day spa is expected to open in February.
Negotiations are under way to fill most of the 15,000-plus square feet still vacant in Meadtown, said Jerry Welkis, president of Welco Realty Inc. in New Rochelle, N.Y., the mall's broker. "We're finalizing a deal right now for a shoe chain to take over the Marty's Shoes space," he said. "The idea is for them to open for spring of 2010."
A deal is also in the works with a restaurant to take the place of the Falls View Grill, he said, and Welkis hopes to lease all but 5,000 square feet by the late spring in the 77,000-square-foot mall. The shopping center has good visibility, customer traffic and easy access to Route 23, he said.
"This center is like a lot of other centers in New York and New Jersey," said Welkis. "It really got hit with an onslaught of major companies going into bankruptcy. It has nothing to do with the center itself."
New interest in Meadtown and Butler Bowl Plaza came recently after the owners of the 47-year-old bowling alley in the Butler shopping center gutted it in 2007 and replaced it with four storefronts and the sports club.
Sal Mastropole and his wife, Sylvia, a hairstylist, plan to open "b euphoria" a hair salon and day spa, in a 1,900-square-foot space in February as her first salon business.
"There's traffic — lots of people walking — it's accessible and off of a major highway," said Sal Mastropole. "It's a no-brainer."
That leaves 2,500 square feet still left to rent for the Butler plaza's owners.
"We're optimistic," said Jim Rohrer, president of Butler Bowl Inc., a consortium of 15 stakeholders. "We're getting a lot of phone calls for the space we have. They're looking, but they're also shopping."
The storefronts are small, said Rohrer, so the callers are doctors and physical therapists and convenience and nutrition stores attracted by the sports club.
Goldstein Group's Lanyard said dental practices, day-care businesses, hamburger franchises such as Smashburger and the health club LA Boxing are also opening in strip centers because it's more affordable now.
"There's a real entrepreneurial spirit out there,'' said Lanyard, "a window of opportunity [about 18 months] to get into great locations with landlords who will now entertain talking to [these] tenants."
In the case of Petco, Welkis said the property owner had to pay for and do the renovations — for an amount he wouldn't disclose. Pet stores are one of the few sectors that have prospered in the recession.
"We kept rent where we needed it to be and where we wanted it to be, but it cost the landlord some money to do that," Welkis said. "In other times, we wouldn't have had to."
Welkis said in general, rents are as much as 30 percent lower than they were 1 1/2 to two years ago.
The lower lease rates prompted Rich Mayer and his family, who were looking to expand their two South Beach Tanning Spa salons, to choose Meadtown. They also wanted the parking and visibility, and they believed New York Sports Club members would be into tanning.
The landlord put in a drop ceiling, removed partitions, leveled the floor and installed lights in the 1,650-square-foot space.
"It's definitely a tenants' market," said Mayer, "because price per square foot is much cheaper now than when the economy was better," about 30 percent to 50 percent less, he said.
Kinnelon Bagel owner John Park said he has yet to see business pick up from the new tenants in Meadtown, although the business has survived the vacancies and the recession.
Sales dropped as much as 40 percent from January to early April but picked up over the summer, only to fall after September. October sales were down as much as 15 percent compared with a year ago, said Park.
"It's going to take some time" to recuperate, he said.
Other businesses have seen more evidence of a turnaround. The sports club's entrance in the back of Meadtown by the movie theater has given new attention to the otherwise out-of-the-way Meadtown Barber Shop.
"That has helped," said owner Ray Mininni. "You have to have stores that bring people. We're hoping they do good."
