The perfect storm was brewing inside the walls of the Swatara Township-based Harrisburg Mall during the second half of 2003.
Two of the mall’s anchor tenants, J.C. Penney and Lord & Taylor, had left. The third anchor, Hecht’s, was threatening to pull out. The mall was likely to be demolished.
It was exactly the kind of storm Larry Feldman looks for when searching for a mall to add to the portfolio of shopping centers he has renovated. In September 2003, Feldman Equities Inc. acquired the mall for about $17 million. The money that will eventually be spent to revive this mall will equal almost four times the acquisition price.
Feldman is chairman and chief executive officer of New York-based Feldman Mall Properties Inc. Feldman Equities went public at the end of 2004 and changed its name to Feldman Mall Properties in the process. Around the same time, the word “East” was dropped from Harrisburg Mall’s name, to give it a more regional appeal.
Harrisburg Mall was built in 1969, said Mark Nobile, general manager of the mall. Originally, the mall was anchored by department stores Gimbels, J.C. Penney and John Wannamakers, Nobile said.
As other malls and big-box retailers made their way into the area over the years, Harrisburg Mall began to lose its market share, Feldman said. “The mall industry is in trouble. The only way that it can survive is by totally reinventing itself,” Feldman said.
The Lebanon Valley Mall, Lebanon County’s only enclosed mall, lost its J.C. Penney anchor store Jan. 20. The closing comes as a result of J.C. Penney’s corporate strategy of moving out of enclosed malls and into open-air strip malls, said Christopher Straka, general manager of the mall.
Straka is talking with major national retailers that want to fill that space.
“In any property, you look for opportunities to make improvements and changes to your tenant mix. This is a time of growth for us, and we’re looking forward to the opportunity to change our tenant mix,” Straka said.
In re-arranging a tenant list and renovating a mall, Feldman’s strategy is to end up with a product that will shock the consumer into returning.
The Business Journal recently spoke with Feldman about the strategy he has been using to kick Harrisburg Mall into gear. See “A time to change.”
A time to change
2003: Anchors away
The first step to renovating any mall is to stabilize the anchor tenants, Feldman said. Malls do not make a lot of money from the rent paid by large anchor tenants, but the smaller tenants who pay the majority of the rent will not stay in the mall without the security of strong anchors, Feldman said.
Feldman worked to lock in leases of as long as 15 years with anchor tenants. Feldman brought on Boscov’s to replace J.C. Penney and attracted Bass Pro Shops to take Lord & Taylor’s place. He convinced Hecht’s to retain its anchor position and sign a long-term lease. Feldman’s method of persuasion was dangling money for renovations and the promise of renovating the mall’s façade.
2004: Open the doors
Boscov’s opened a 185,000-square-foot department store at the mall in spring 2004. Bass Pro Shops opened an Outdoor World, which encompasses about 225,000 square feet, at the end of 2004. Significant exterior renovations were also completed by the end of 2004, including refurbishing the mall’s façade and entrances, repaving the parking lot and upgrading the mall’s outdoor sign.
2005: Appeal to many
Feldman began to see the fruit of his labor in 2005. Over the next two years, sales at the mall would increase by between 15 percent and 20 percent as a result of two years’ worth of changes.
Wheels began turning on plans for a high-end movie theater, too.
The parent company of Hecht’s, the May Department Stores Co., was purchased by Federated Department Stores Inc. in August. As a result, Hecht’s would be converted into a Macy’s store in 2006.
2006: Moving forward
In August, Feldman and Aliance Management Inc., operating as The Great Escape Theatres, broke ground on a theater complex at the back of the mall. The 14-screen complex will include stadium seating, rocking, high-back chairs and digital surround sound.
Feldman began formulating plans for the theater to tie into a streetscape plan for the front of the mall.
2007: Build, build, build
Construction is set to begin this year on a streetscape addition that will be attached to the front of the mall, facing Paxton Street. The streetscape is set to include a mix of restaurants and big-box retailers. About four shops will be a part of the streetscape, while at least two pad sites will house additional retailers.
Feldman declined to name the retailers but expects these additions to increase foot traffic and sales at the mall. The concept is that customers will grab a bite to eat, do some shopping and then catch a movie at the theater, set to open in the fall.
2008: Up, up and away
Once the streetscape is completed and its stores are open for business, Feldman will begin to look at the next phase of development. “In the mall business, you always look to upgrade, and there’s no such thing as sitting on your laurels and doing nothing,” Feldman said. “There are no immediate plans as to what the plans will be, but rest assured there will be more upgrading beyond the street-scape. It’s the only way you can survive this overly competitive business.”
