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Others profits wane when anchors go away

Midday on a Monday used to be the heart of the lunch rush at Skinny Linguine's.

The 5-year-old restaurant in Seven Springs Shopping Center once was filled with a chattering crowd wolfing down Chicago-style pizza and homemade cannoli. But last week, the only midday buzz came from the refrigeration units echoing through the empty restaurant.

Owner Andy Despota stopped serving lunch in December after World Gym closed in the space to his left, and the Winn-Dixie to his right shut down. Lunch was once a quarter of a day's sales, and many of those customers were en route to or from the grocery. In fact, the foot traffic from the grocery meant the difference between breaking even on lunch and making a profit.

Despota may be lonely for shopping center neighbors, and he's certainly not alone. Scores of small business owners have found that the quality of their locations has changed dramatically _ even though they haven't moved an inch _ after the major tenants that draw traffic to shopping centers have moved.

Some, such as Winn-Dixie, Frank's Nursery & Crafts, Heilig-Meyers and Wards, have pulled out because of companywide problems. Others such as Wal-Mart, Publix and drugstores, in an effort to dodge the fate of the former group, have left to build new store prototypes that promise to be more lucrative.

Either way, the effect for the little guys who are left behind is the same: vacant parking lots, loss of foot traffic and loss of sales. Patrick Berman, a retail broker with the real estate firm Cushman & Wakefield, says that when anchors leave, sales can drop by 20 percent to 30 percent for small tenants.

Take Steven Tindell, who opened a liquor store, S&S Spirits Inc., in the Ridge Road Center in September. He chose that location in large part because it was anchored by Publix, which left in February.

"The parking lot was full every day, and I figured everyone wants to do one-stop shopping," Tindell said. Though he's got a core of regular loyal customers, he says he thinks his volume of sales might have been higher had Publix stayed.

Exacerbating the situation is that other major tenants in the shopping centers often have clauses in their lease agreements that allow them to close or pay lower rents if the other anchors close. Most major retailers also have non-compete clauses that prohibit the landlord from renting space to competing businesses. If the anchor has such a clause and leaves before its lease is up, the space cannot (during the term of the original lease) be sublet to a tenant with a competing business.

So it's not surprising that the spaces abandoned by anchor tenants end up being gyms, thrift stores, churches, medical offices and call centers. While those tenants pay the rent, they don't create the same draw as the original anchors.

Last week, Wal-Mart vacated a 100,000-square-foot space in Embassy Crossings as it opened a supercenter at U.S. 19 and Ridge Road. This is one of hundreds of empty Wal-Mart discount stores that consultant Al Norman has made into the centerpiece of his consulting business.

Norman, who has a firm called Sprawl Busters and a book called Slam Dunking Wal-Mart, says he gets frustrated with cities that encourage development of big box and bigger box and biggest box development. He says that while these supercenters just tend to suck sales from existing businesses, city officials are often lured by the promise of jobs, high property tax revenues and new buildings. But this kind of activity does not qualify as economic development, he said.

"It's not a shot in the arm to the economy; it's a shot in the head."

What will the future hold? Norman envisions a community that will "end up with a fair amount of acreage squandered for development that came and went. "All the stores that have been overbuilding are going to be empty monuments to greed over need."