Hard times, small town discourage anchor stores

Mendenhall Mall struggles to draw Gottschalks substitute

Posted: Wednesday, January 06, 2010

Tough economic times are making it difficult to fill the anchor space at the Mendenhall Mall, but the downturn is only part of the problem, mall Property Manager Larry Bauer said.

Klas Stolpe / Juneau Empire
Klas Stolpe / Juneau Empire

Juneau's population is too small to draw national retailers that would fill a space as large as the one that held Gottschalks, Bauer said.

Large retailers generally look for a population of 100,000 within a five-mile radius.

"We just don't fit their market," Bauer said. "We try to sell them on Juneau being a Southeast hub but they do the numbers and it's always an uphill battle."

Bauer said he talked with one national retailer who showed interest in renting half the mall's 36,400-square-foot anchor space, but they want another national retailer to rent the other half. Until a second tenant is found the first is on hold.

"We would love to have it filled immediately but it's hard to find anchor tenants that could take that much space," Bauer said.

Gottschalks Inc. filed for bankruptcy one year ago and announced last May that it would close its Alaska stores. The Juneau location has remained empty since.

Bauer would not say which retailer was interested in half the space. Most national chains ask for confidentiality for competitive reasons when they shop in a new market.

Employees who work at stores inside the mall said the anchor store's departure hasn't hurt their business.

The mall's tenants have increasingly become service-oriented rather than retailers.

Tenants include a handful of restaurants, a few shops doing alterations or offering sundries and crafts, a military recruiter and a public library branch.

Sears is the largest national retailer in the mall. It is a franchise that is locally owned and run, Bauer said.

"It's more of a community-oriented mall in that tenants provide a service," Bauer said.

Malls across the country are struggling with increasing vacancy rates, said commercial real estate appraiser Kim Wold, who specializes in Southeast Alaska properties.

"One of the biggest obstacles is that the national and regional retailers that would normally be attracted to a mall environment are out of the marketplace. They're just not expanding at this point," Wold said.

The trend of renting to non-retail tenants will continue, especially in Southeast, Wold said.

"I don't see any turnaround in the near term. There may be instances where portions of these malls need to be redeveloped down the road," he said.

As for an anchor tenant at the valley mall, Wold isn't optimistic, either.

"There's one tenant that's looking in Juneau but they really don't want to be in an enclosed mall," he said.

Owners of the Mendenhall Mall, Salmon Creek LLC based in Seattle, purchased it in 2006 but put the mall on the market about a year ago. Bauer is the listing agent.

The $6.5 million price does not include Super Bear Supermarket or the underlying land, which is leased.

• Contact reporter Kim Marquis at 523-2279 or by e-mail at kim.marquis@juneauempire.com.

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