Traditional shopping malls face challenges in changing retail landscape

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Randy Strisko looked around at the empty storefronts at Merritt Square mall, where he has been a retail tenant for more than four decades, and shrugged.

Strisko now owns the Shades 4-U sunglass kiosk, which he has operated for the last six years. Before that, he operated two surf shops at different times at the mall. In all that time, Strisko said, he couldn’t recall seeing as many vacancies as the mall has now.

“COVID took a toll on everybody,” he said.

Oh, how times have changed. For decades, Melbourne Square and Merritt Square malls were the places to shop in Brevard County. Today, Brevard’s two premier malls need to get creative to attract shoppers.

Experts say the changing landscape of retailing, locally and nationally, presents significant challenges for malls and other retail centers like them, as more and more consumers opt to shop online or at open-air “lifestyle centers” like The Avenue Viera or Titus Landing in Titusville.

The coronavirus pandemic exacerbated the challenges, as did last month’s Chapter 11 filing in bankruptcy court for the owner of Melbourne Square and the April 30 shutdown of one of Merritt Square’s anchor tenants, Sears.

But on recent weekday afternoons, both malls had a mix of younger and older shoppers, albeit Melbourne Square appeared busier. The Melbourne mall also had far few store vacancies than Merritt Square.

Mike Slotkin, a professor of economics at Florida Institute of Technology’s Bisk College of Business, points to his own retail spending practices as an example of the plight of traditional malls.

He can’t remember the last time he shopped at a traditional mall — even for clothing and shoes, which in the past he never would purchase without trying the items on first.

“I just point and click, and it’s there,” delivered quickly outside his front door, after he orders the items online. “The world moves on.”

More: Melbourne Square mall owner Washington Prime files for Chapter 11 bankruptcy protection

More: Sears to close its last Brevard store, on Merritt Island, as part of continued cutbacks

Stephanie Cegielski, vice president of research and public relations at International Council of Shopping Centers, said indoor malls “really took the brunt of it” during the pandemic, as many had to remain closed for expended periods of time. 

This wasn’t as pronounced in Florida, which was a more “open” state compared to states like New York, where the International Council of Shopping Centers is based and where some malls were closed for six months, Cegielski said.

In comparison, Merritt Square, for example, closed for only a month — from April 3 to May 4, 2020 — although some stores had more extended shutdowns.

In a bid to lure in shoppers, a number of conventional shopping malls are shifting their tenant mixes toward having destination attractions other than traditional big-box department stores and other large retail tenants.

Cegielski said these might be a larger concentration of upscale restaurants, movie theater complexes with dining options available inside the theaters, ropes courses, rock-climbing attractions, miniature golf, indoor go-carting, an Apple technology store or a Lululemon athletic apparel store with an attached yoga studio.

Some also are redeveloping mall properties to include condos, creating a “live, work and play type of environment,” Cegielski said.

“You’re always going to have traditional malls, but the consumer evolves and their tastes are changing,” Cegielski said. “It’s a cyclical industry. There are hard times and not-so-hard times.”

‘Unique opportunity’ at Merritt Square

At Merritt Square mall off State Road 520 on Merritt Island, General Manager Shannon Stanley says she is remaining optimistic about the future — even though anchor tenant Sears closed in recent months, as did the mall’s Ruby Tuesday restaurant and the FYE store that sells music, movies and other entertainment products.

Stanley said both FYE and Ruby Tuesday “have scaled down their locations nationwide, but we have already received quite a bit of interest in both blocks. We have over half a dozen deals currently in motion, and a number of additional

opportunities in the pipeline, so we are very optimistic about the future at Merritt Square.” 

Stanley cited the planned move of Health First’s Cape Canaveral Hospital from Cocoa Beach to a site across State Road 520 from Merritt Square as a plus for the mall.

“We have a unique opportunity to create a new hub of activity around our mall,” as a result of the relocation of the hospital, Stanley said. “And we are pivoting our approach to capitalize on the attention our property is receiving in response. Today, we are focusing our leasing strategy on more out-of-the-box and non-traditional opportunities, especially for local businesses that are looking to expand. We’ve also tapped into a small-scale events market.” 

Strisko said he, too, remains optimistic. He has seen potential new tenants checking out space in the mall, and is anxiously awaiting the return of Port Canaveral cruise passengers and ship crew members to the mall, potentially as early as late-July. Cruises have been idled since March 2020 because of the pandemic.

Strisko said many cruise passengers stay on the Space Coast before or after their cruises, and Merritt Square is a key shopping destination for them. Ship crew members also shop at the mall, if they can leave the ship while it is in port for the day — something that may still be restricted by COVID-19 when cruising resumes.

He noted that “the beaches are packed” with tourists, and the opening of a hospital across the street will be “a game-changer” for attracting traffic to Merritt Square.

Strisko also is pleased to see the movie theater complex at Merritt Square back in full operation with first-run movies, as movie patrons are a draw for his sunglass business.

“You’ve got to roll with the times,” Strisko said.

But Gustavo Rondan, manager of the I Cover cellphone repairs and accessories store, is less upbeat.

Rondan’s store location is in a section of the mall that has a number of vacancies, and, except for the weekends, he says business is relatively slow.

“It’s hard to tell,” Rondan said. “People say it’s getting better.”

Rondan said he is banking on the customer service he can deliver — helping people with phone repairs — to keep the business going. He noted that’s not something you can buy online.

Doug and Amy Bailey of Viera were driving past the Merritt Square mall on a recent Friday, and decided to stop in. They said they were a little surprised by all the vacant storefronts.

“I don’t know that they’re going to make it if they can keep stores,” Doug Bailey said.

Amy Bailey added that COVID-19 shifted many retail transactions from in-person to online, and she thought that was evident by what she saw at Merritt Square.

Stanley said she could not disclose the store vacancy rate in the mall, while noting: “We unfortunately have had some brands close their doors over the course of the last few months, many of whom are scaling down their locations nationwide. While it’s certainly disappointing, we’ve received quite a bit of interest in our vacant spaces, and we look forward to announcing a number of new additions soon.”

Stanley said she is optimistic that the initial tenant announcements “will help generate further activity here.”  

Stanley said there are redevelopment plans under consideration for the site, but mall officials aren’t ready to detail them yet.

“The cornerstone of our leasing strategy at the moment is diversification,” Stanley said. “We’ve benefited immensely from our national retailers, and we look forward to adding local restaurants and retailers to that mix. That’s really what we are prioritizing at the moment at Merritt Square.”

Stanley concedes the growth in online sales, but says Merritt Square is trying to combat that, recognizing there are things about in-person shopping that an Amazon Prime transaction can’t deliver.

“We are working hard to transform Merritt Square into a hub of commercial activity, from welcoming local vendors and pop-up retail markets, to musical guests and dance performances,” Stanley said. “If the pandemic has taught us anything, it’s that people really crave those types of in-person experiences and interactions. We are building something that isn’t really comparable to anything you can do online, so we don’t see our center as in competition with those services. I think that’s been reflected in the foot traffic we’re seeing, and we look forward to continuing to identify ways we can engage both locals and visitors on-property.”

The departure of Sears provides uncertainty into how that retail space will be filled, as the brand “owns and operates the building independently,” Stanley said. But she said the mall is open to working alongside Sears to find the right fit.

She also said some Merritt Square retailers are reporting sales volume as being on par or exceeding 2019 levels, but could not disclose which retailers they were.

Melbourne Square says it’s ‘business as usual’

Melbourne Square mall’s owner, the Washington Prime Group, in June filed for Chapter 11 protection in U.S. Bankruptcy Court.

But the Ohio-based company contends that will not affect day-to-day operations there or at the company’s other shopping center properties.

“It’s business as usual at Melbourne Square mall,” the company said in a statement to FLORIDA TODAY. “The COVID-19 pandemic has created significant challenges for many consumer-facing companies, including Washington Prime Group. The company has determined that the Chapter 11 path is the most effective next step to resolve the company’s outstanding indebtedness, as we emerge from the pandemic.”

Washington Prime said that “throughout the Chapter 11 financial restructuring, we expect business as usual at Melbourne Square mall, where our tenants, sponsors and employees will continue operating as normal, with a focus on providing enjoyable experiences for our guests.”

Melbourne Square General Manager Cindy Rodenhizer said the mall earlier this year added what it calls “The Hub” to its Center Court.

Rodenhizer describes it as “collaborative space (that) offers guests a place to work, connect and create, either by themselves or with others.”

On a recent Thursday afternoon, that space was sporadically occupied by individuals and small groups of people checking their phone, doing work or meeting with one another.

Rodenhizer lists as among the tenants that filled retail slots at the mall in 2020 as Art Blvd, J&F Latin, Jungle Range, LA7, Maccabi USA, Sky Kone and Turtle Bags. This year, they were joined by It’s Different, Paris Palace Luxury Haircare, The Pizza Place, Tik Tok and Trendz. And, later this year, among those joining the mall lineup will be Crepes & Salad Vibes, Go Green CBD, Mr. & Mrs. Crab and Wooden Spoon. 

Most are not exactly household names to shoppers. But they do provide diverse offerings for people visiting the mall, located off West New Haven Avenue/U.S. 192.

Katlyn Danzell, assistant manager of the Art Blvd art and gift store store at Melbourne Square, said business is starting to pick up.

“We get really busy on weekends, Danzell said. “Business is decent around here.”

Michael Gargano, a sales associate at Globall Sports store at Melbourne Square, which sell professional and college team apparel and caps, noted that “it’s been kind of tough in the past year. It just depends on the day.”

Noting that Globall Sports closed a mall store in Vero Beach last year, Gargano said: “We just want to keep this business going,” along with its stores in Jensen Beach and  Lawrenceville, Georgia.

Gargano said the increased number of fans at sports events and the start of college and pro football seasons should help boost sales at Globall Sports stores.

Ronald Peoples, an aeronautics engineer from Melbourne, visited Melbourne Square on a recent Thursday afternoon and liked what he saw.

“It’s clean, and the people are friendly,” Peoples said.

He added that in-person shopping at malls is “not the way it used to be, but it’s coming back.”

Melbourne Square also is seeking to attract visitors through various community events inside the mall.

Rodenhizer cited a “Beat the Heat” event for families in June and an early back-to-school supply drive. A back-to-school party and teacher appreciation event is scheduled for Aug. 7.

“Melbourne Square is embracing our role as a community partner by finding unique ways to transform our space for social good,” Rodenhizer said. “Additionally, through our WPG Cares initiative, Melbourne Square strives to support community members through goodwill initiatives, such as food donation drives, blood drives and other events.”

Melbourne Square is the second local shopping center within the last year to have its owner enter Chapter 11 proceedings. 

More: Hammock Landing mall owner files for bankruptcy amid COVID-19 pandemic

In November, CBL & Associates Properties Inc., the owner of the Hammock Landing shopping complex in West Melbourne, announced it had filed for Chapter 11 protection in U.S. Bankruptcy Court for the Southern District of Texas.

“CBL’s properties will continue to operate as normal, and customers can expect business as usual throughout this process,” Stacey Keating, a company spokesperson, said at the time.

The Avenue provides indoor/outdoor mix

Michelle Reyes, marketing coordinator for The Avenue Viera, said customer traffic and sales at Viera’s open-air shopping center have recovered to exceed the pre-pandemic levels of 2019.

She believes many people have grown tired of being cooped up during the pandemic, and want to interact in public.

“People are just happy to leave their house again,” Reyes said.

But, Reyes added, some are more comfortable in an open-air mall like The Avenue — where they can “pop outside” into the fresh air between visiting stores — rather than going to a traditional enclosed mall.

Reyes said, unlike many enclosed malls, The Avenue was able to remain open throughout the pandemic, although some of its tenants did temporary close.

More: Shopping local during holiday season has ripple effects in Brevard County | Opinion

Among additions to The Avenue in the past year are J. Vanover & Co. Furniture; Lululemon; a Shabby Loft store that sells art, crafts, jewelry and woodworking items; a Sephora beauty-products store; and Taj: Modern Indian Cuisine.

Also relatively new to the mall is 7 Senses Kids, a gift shop for mothers and children, combined with a site that offers pediatric therapy services at its occupational therapy studio. 

Reyes expects several more tenants to open before Christmas, including Sola Salon Studios. The location will feature 34 individual salon studios designed for professionals in the cosmetology industry, including hair stylists, barbers, estheticians, eyebrow artists, makeup artist, massage therapist, nail technicians and other beauty-related professionals.

Reyes said she believes The Avenue has a strong mix of locally owned and national retailers and casual and fine-dining restaurants, many of the latter offering outdoor dining. Plus an experiential attraction — Urban Air Adventure Park — which Reyes described as “a mainstay” of the complex.

Also boosting The Avenue is the strong housing construction market in the Viera area.

“We feel positive about the shopping experience,” Reyes said.

Reyes said, even with the increase in online shopping, there are instances in which businesses that start out as online-only grow to the point at which they want to expand to a bricks-and-mortar location in The Avenue or elsewhere.

Despite the challenges traditional enclosed malls in Brevard and elsewhere face, Reyes said she is optimistic about their future.

“We hope our local malls do well,” Reyes said. “We hope they will stay strong and rebound. When they do well, we do well.”

Titus Landing succeeds at site of failed mall

In Titusville, the Titus Landing open-air shopping center was built on the site of the once-popular — but since-failed and torn-down — Miracle City Mall off U.S. 1.

“The center is doing well, and it’s attracting shoppers,” said Cliff Aiken, chief investment officer for Ohio-based Exxcel Property Management LLC, which owns and manages Titus Landing. “We feel like we’re the No. 1 destination” in the Titusville area.

Aiken describes Titus Landing as “more of an entertainment center,” than a traditional shopping center, with its Epic Theatres movie complex and its large concentration of sit-down and quick-serve restaurants.

“I believe people like to get out for dinner and get out for entertainment,” Aiken said.

Unlike the Melbourne Square and Merritt Square malls, Titus Landing’s anchor tenants are not the traditional major department stores like J.C. Penney and Macy’s. Rather, they are such retail draws as Beall, Hobby Lobby, Pet Supermarket, Tuesday Morning and Ulta Beauty.

More: Chipotle Mexican Grill set to open this fall at TitusLanding in south Titusville

Aiken said the increased single-family home and apartment construction in the Titusville area is helping attract customers to retail complex, as is the presence of the Parrish Healthcare Center at Titus Landing.

“Parrish is a significant player for us,” Aiken said.

More: Demolition of Searstown Mall could begin next year, developer says

Not far from Titus Landing along U.S. 1, the struggling Titusville Mall (formerly known as Searstown Mall), is looking for a transformation as well. A current proposal calls for the demolition of that retail center as early as next year as part of an overall project to bring 162,000 square feet of retail space and 340 new apartments to the property.

What the future may hold

Slotkin, the Florida Tech professor, said the momentum of online ordering “for everything from cat food to toiletries to clothing” will be a difficult obstacle for retail malls.

“COVID just forced certain things to take hold,” Slotkin said.

On the other side of the equation, Slotkin said, is the fact that “people are social creatures, and want to get out and be with other people. They have a thirst to get out and do something social. They can’t just sit in their house all day, all the time. They want real contact, not Zoom contact, not phone contact.”

A key could be the right mix of tenants, including higher-end and specialty store, that would encourage shoppers to venture out to “sample the wares,” he said.

International Council of Shopping Centers official Cegielski said “people are looking to travel and they’re looking to shop. People are definitely going out and spending again.” She said that includes buying clothes for work after extended periods for many of working from home, clothes for vacations, and clothes for visits to restaurants and clubs.

She noted that, although online shopping continues to increase, it is increasing at a pace that is less than a year ago. In May, for example, online shopping volume was up 8% from May 2020. In comparison, the increase was 29%, comparing May 2019 to May 2020, she said. 

Dalzell, the Art Blvd assistant manager, said, personally, “I would prefer to go shopping in public, and see the clothing and try on the clothing,” rather than shopping online.

Reyes at The Avenue Viera says that among the things that Brevard County has going for it is its growing market size.

In the past, many national retailers saw the Space Coast “as really green” — both literally as having many undeveloped areas and figuratively as not being ready for some major retailers to enter.

“Now,” Reyes said, “we are becoming much more desirable as a place to open new locations in.”

Dave Berman is business editor at FLORIDA TODAY. Contact Berman at [email protected] Twitter: @bydaveberman.

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