Strip Malls Struggling To Stay Afloat
ALEX COHEN, host:
This is Day to Day. I'm Alex Cohen. If you don't have much time or money, you may want to consider the holiday tradition known as regifting. That story in just a moment. But first, we go to the mall - the strip mall.
These sprawling retail behemoths are unavoidable here in southern California. They're also a good indicator of what's going on in the nation's economy. Reporter Skye Rohde brings us this story from a strip mall in the San Fernando Valley.
SKYE ROHDE: Ventura Boulevard bisects Encino like a belt on a belly. It's the main thoroughfare of the San Fernando Valley. An estimated 50,000 cars a day travel along the road.
There are miles and miles of strip malls on either side, and in pretty much every single one are small mom and pop businesses struggling to keep their heads above water. Todd Nathanson runs illi Commercial Real Estate, which manages a strip mall at the corner of Ventura Boulevard and Louise Avenue that has 13 ground floor units. It's the traditional L-shape.
Mr. TODD NATHANSON (President, illi Commercial Real Estate): It's also more desirable because it sits not only at an intersection, but a signalized intersection, which the stronger retailers are going to look for. It has great signage and what appears to be a fairly full shopping center.
ROHDE: Truth is, the restaurant back in the elbow of this putty-colored shopping center has been closed for six months and three other tenants have indicated they're willing to vacate if someone else will rent out their spaces. But a kitchen and bath home improvements store has just rented what's called the end cap, the most visible and close-to-the-street spot. So, Nathanson considers himself lucky.
Mr. NATHANSON: You know, a year ago, the amount of vacancy on the market was almost nil. New centers were commanding a rate that a lot of retailers are realizing now was too high.
ROHDE: Overall, U.S. retail vacancy rates are just over six and a half percent. That's up half a percent from last year. CoStar group, which provides commercial real estate data, says the numbers for vacancies in shopping centers, strip malls, are even higher. Here in L.A. County, Todd Nathanson says, that number is as high as 15 percent.
Mr. URI FOGEL: Todd, how are you doing?
Mr. NATHANSON: I'm good, how are you, Uri?
Mr. FOGEL: Happy holiday.
ROHDE: Nathanson's friend Uri Fogel(ph) is a landlord who owns eight shopping centers. Fogel says he can't raise his tenants' rent this year.
Mr. FOGEL: Most of them are moms-pops business that come in the morning, six o'clock in the morning, and try to make a living. So I decided not to increase this year the rent for no one, which is, according to the leases, five percent annually.
ROHDE: Landlords have come up with some creative ways to fill vacant spaces. Some are negotiating shorter lease terms, one-year or three-year leases instead of the standard five-year. Others rent out store fronts and the sides of buildings for advertising. And they're looking to tenants like churches and trade schools to fill the spaces that don't have too much visibility from the street.
The tenants are getting creative, too. As retail sales drop, many are finding they have to diversify to survive. At Comfort In Style, you can buy memory foam mattresses or ergonomic chairs or even a toilet seat with bars on each side. Eddie Braun estimates that in-store sales are down almost a third this year. But, he says...
Mr. EDDIE BRAUN (President, Comfort In Style, Inc.): We do work with insurances, as well, and that's something that, even though they also cut down, by doing good service, providing good products, we can receive new business.
Ms. LAURIE LIPSY: Business is not so great right now.
ROHDE: A couple storefronts down, Laurie Lipsy(ph) has run the jewelry studio for 10 years. Her business is down 60 percent this year.
Ms. LIPSY: We can't do anything about it, so there are sleepless nights. But you just do what you have to do.
ROHDE: Lipsy and her husband are in a unique position. The economic downturn that's causing their jewelry store to suffer is actually helping their other business. They also guide jewelers through the process of closing up shop.
Ms. LIPSY: We'll probably be OK because we have the other business that feeds into this one. We all just need to wait this out. If somebody wanted to take over my lease right now, I'd be on the road doing the consulting work. And then, when it would all come back around, we'd start all over again.
(Soundbite of people talking)
ROHDE: But not everyone is suffering. Herbert Zinger(ph) and his wife own the baklava factory which sells baked goodies nearby.
Mr. HERBERT ZINGER: Our business is going up.
ROHDE: Going up?
Mr. ZINGER: We are surprised, but our business is much, much more better than last year.
ROHDE: Well, you are the first person I think I've heard to say that...
Mr. ZINGER: Yeah, I'm surprised myself, and knock on wood, hopefully, it stays this way.
ROHDE: It might be because the baklava hits the spot. It's good stuff. But, Zinger says, it might also be that the family-owned pastry shop across Ventura Boulevard closed three months ago. For NPR News, I'm Skye Rohde.
NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.