April 27, 2015
After 34 years, JCPenney, an anchor of the Hudson Valley Mall since the mall’s opening in Town of Ulster in 1981, is no more. Also gone are The Children’s Place, Deb Shops, and RadioShack, the last two victims of corporate bankruptcy. And across Route 9W, Office Depot, located in the hangar-like building that once housed the area’s first supermarket, is set to close its doors in a couple of weeks.
The closings comprising this latest wave of retail Armageddon are related to serious corporate issues, but they also signify an ominous shift in the local retail landscape, according to Terry Parisian, general manager of the Hudson Valley Mall.
Major stores have come and gone before at the mall: when Kmart, another anchor, closed in 1995, the store was vacant for a couple of years before the space was reconfigured into Best Buy and Dick’s Sporting Goods, a part of the mall that was further expanded with the opening of Target in 2001. The Hudson Valley Mall has reinvented itself numerous times.
But this time around, that might be more difficult. While high-end malls are thriving, mid-market malls anchored by JCPenney and Sears are struggling nationwide, reflecting the growing disparity between the rich and the middle class. It’s a trend that’s mirrored locally: in a column in the Kingston Times published in early January, the publisher of this newspaper reported on the growing income disparity in Ulster County. “The statistics show that the 1705 Ulster County filers with incomes of $200,000 or more in 2011 generated more adjusted total income than all 49,126 filers with incomes below $40,000. That’s inequality on a grand scale,” he wrote.
According to consultancy Green Street Advisors, a fifth of the nation’s malls have vacancy rates of 10 percent or more. Three percent, triple the number in 2006, are considered dying, with vacancy rates of 40 percent or more. “If you look at the stores from a corporate viewpoint, the decrease of the middle class means that of course you have underperforming stores, which they are forced to close,” said Parisian.
Three years ago, the Hudson Valley Mall had an occupancy rate of 98 percent. Now it’s in the mid 80s. The region’s lackluster demographics make it difficult to find new retailers, said Parisian. According to a Marist Bureau of Economic Research study, the median household income of Ulster County is below the national average and declining, according to Parisian. The study also showed that the population has declined four percent, compared to an increase of five percent in 2007. “Until things change, we’ll see more of this happening,” he said. “The current demographics of the county means it makes no sense for stores to exist here.”
Parisian said sales are down four to five percent compared to 2007, the mall’s best year. Nationally, with overall online retail sales leveling off to 10 percent annual growth, he said he doesn’t believe that the internet is to blame as much for the decline as the loss of household income of the middle class. Seventy percent of the GOP is driven by consumer spending, and of that, 90 percent consists of middle class workers, he said.
However, people’s busy schedules and the internet is having an impact on shopping habits, he said. Shoppers spend less time in the mall, which has negatively impacted the food court; while once the mall had three sit-down restaurants, now it has none. “Foot traffic is down at the mall,” Parisian said. “People are doing their shopping online and coming to a brick and mortar store to buy the item.”
But he also lamented the local resistance to new job creation in the county, as illustrated by the successful fight led by citizens against a Niagara Bottling plant locating in Town of Ulster. In order to attract stores, “you have to show growth,” he said. “When retailers want to locate here and see a manufacturing company for 120 employees shut down, what reason do they have to establish themselves here?’ He also noted that the mall is a significant employer. “When I did a mixer at the end of 2014, we had 1,100 employees,” of which 60 worked at JCPenney. Some are part-time workers, but “until people get off their horse about no industry here in Ulster County, every little bit helps.”
According to the terms of its second five-year option on its original 20-year lease, JCPenney will be paying rent until 2018. Sears, another mall anchor and troubled national retail chain, also has exercised options on its lease through 2018; despite rumors, Parisian said so far there’s no word it plans to close. He said the amount of rent wasn’t an issue: “every lease is different, but if you take a look at Penney’s, they did their lease in 1981 so their rent is not a driving factor.” The common area and maintenance charges tenants pay, in addition to utilities, are stable, although he acknowledged “most tenants want their own entrances.” (Newer malls resemble main streets, with stores arranged on a grid of sidewalks and roads.)
In getting new tenants, he said the current strategy was to look beyond retail. “We’re starting to see more mixed use instead of just retail—more restaurants, amusement and fitness centers, spas, doctor’s offices, and libraries.”
While the trend is to buy local and it’s fashionable to lambast the mall, many people depend on it, and the other large chains, for their basic shopping needs, and some for their discretionary purchases as well. Sue Pilla, for example, an Ulster Publishing employee and long-time resident of Mount Tremper, said when her grown-up daughter visits, the two have to travel to Albany or Poughkeepsie to go shopping for clothes. “The quality is not happening, and women my size are mourning the loss of Fashion Bug,” said Pilla.
“I adored Filene’s, but since it became a Macy’s, we’re getting the cast offs,” she added. “Wal-Mart used to have decent stuff, but the clothing line has gone so down hill we’re like a third world country.” The loss of Filene’s, Gap, Anne Taylor, and Talbot’s, among others, makes it nearly impossible to find quality women’s clothing in the area.
Plus, Pilla noted that the best place to buy appliances is Sears, so the closing of that store would represent a significant hardship. “They have great service, selection and prices,” she said. “I use Sears for other basics.” And Barnes & Noble “is where I go on a rainy day to browse. I’d be devastated if they closed because it’s where I raised my kids.”
The negative repercussions go beyond the lost jobs—Office Depot employed 24—and lack of convenience for shoppers. Town of Ulster Supervisor James Quigley noted that the large retail chains in Town of Ulster contribute significantly to the county’s tax base. PCK Development, the Syracuse-based owner of the mall, is the fourth largest taxpayer, paying approximately $87 million. Tech City, the former IBM property, is fifth, paying approximately $63 million, and Walmart and Sam’s Club is number six, at nearly $50 million.
Quigley said after the mall filed a lawsuit in 2009 to reduce its assessment, Town of Ulster agreed to a settlement in which the mall got a $16 million reduction in its assessment. “Post settlement, you can’t grieve your taxes, but that’s expired, and they’re coming after us again. Fifty-seven percent of the tax base in Town of Ulster is commercial properties. Everybody looks at Town of Ulster as a being a great success because we’re a commercial hub, but they don’t consider the financial risk that comes with our positions. Every one of these business can write a check to protect their taxes and they do.”
One shopping option is thriving, however. “The thrift stores are terrific,” said Pilla. “Everybody I know on a tight budget is thrift-store shopping. “