Malled to Death?

May 18-24, 2000 / Vol 9, Ed. 20

Inside the University Center last Monday afternoon, there were more birds than shoppers. Had the chirps fallen silent inside the Animal House, one of the troubled mall's few surviving businesses, the University Center would have been as hushed as a library. Its wide, maroon hallways are lined with dozens of vacant storefronts behind chain doors or plastic tarps.

Shopping malls are a tribute to mass psychology: people go to them because people go to them.

The corollary, of course, is that if people stop going, the mall withers.

The University Center, once a bustling center of commerce and one of the most popular teen hang-outs in the city, is now in the withering phase, and stands poised to become Alaska's first major casualty in the Great Mall Slaughter of 2000-2001 (national retail experts recently predicted nearly 20 per cent of all shopping malls open in 1990 will go under sometime in the next year).

Inside the mall on Monday, a pink cockatoo scaled the walls of its pet shop cage to get closer to the store's single visitor, twittering a greeting with a quizzical look on its face, as if asking what the hell happened to the University Center.

It's a good question, since nearly half the mall's 63 shops are empty. Unfortunately, it's not an easy one. Especially when you're trying to appease a cockatoo, a species known to get surly when introduced to concepts like "business model" and "anchor store." Risking the wrath of the cockatoo, here goes:

The business model for a successful Great American Mall traditionally has called for two or more anchor stores - big names like Nordstrom or Sears - to draw the foot traffic necessary to support the mall's smaller, ancillary retailers.

No anchor stores, no foot traffic, eventually, no mall.

Clue one for the cockatoo: University Center's anchor stores - Safeway, Regal Cinemas, and Rite Aid (formerly Payless, formerly Pay and Save)-are all either gone or on their way out.

"When people walk around and see empty shops they don't want to come back," said one University Center merchant recently, pointing toward the 60,000 square feet of nothing behind glass where Pay and Save used to stand.

"We're dying in here."

Merle Rock, owner of Bering Sea Originals, was one of the first to sign a lease at the University Center when the mall opened in 1972. Rock closed his store on May 13 because he and his wife are retiring. He says the University Center was a great place to do business, even when the Anchorage economy crashed in the late 1980s. Still, he agrees the declining occupancy doesn't bode well for the remaining merchants.

"If I was staying open, I'd probably be looking for another place - unless I really got some assurance that this mall was gonna build up again."

Bill Gee, who manages the University Center for the Hickel Investment Company, speaks re-assuringly of the mall's future.

First of all, Gee says, there are no plans to sell the property. He's focusing solely on revival.

"If some of the things I'm working on come together, we're going to come back and really kick butt," he vows.

Gee says he's courting major retailers from Outside to fill the old Pay and Save space. He says the company has three "good candidates" but declined to say who they were because he has competition.

Doesn't Gee's recalcitrance put him in an awkward situation with his tenants?

"It's hard to reassure them when you can't say much," he concedes.

Beyond Gee's butt-kicking, the University Center's last, best hope could be Gottschalks, a California-based group of high-end department stores similar to Nordstrom.

In January, Lamonts, part of a Washington-based department store chain which had three Anchorage stores, including a University Center anchor since 1975, filed for bankruptcy.

On Wednesday, the head suits of Lamonts announced they were selling out to Gottschalks. Gottschalks in turn announced plans to open a store in the University Center, where the Lamonts store remains open, though until recently employees still answered the phone with "Lamonts going-out-of-business-sale, how may I help you?"

Gee and Gottschalks faith is joined by the proprietors of the Natural Pantry, who recently leased the University space left vacant by Safeway, which was ordered by the state last April to divest seven of its stores to avoid a monopoly in the grocery market following Safeway's buyout of the Carrs chain.

Natural Pantry is owned by the husband-and-wife team Rick and Vikki Solberg. Vikki says that in order to take the space over, she and Rick had to prove to the state that they were a supermarket. That meant adding fresh meat and produce to their mix, as well as items such as brooms, mops, and cleaning supplies.

Vikki and Rick had a two-hour interview with Gee and Bob Hickel as well.

"That was almost harder than the Attorney General," Vicki says.

To this day, Rick and Vikki refer to the meeting as "The Quiz."

Gee and Hickel wanted to know how The Natural Pantry would improve traffic in the mall. "We may not be a national tenant, but (the Hickel Company) knows that we've been successful in this town for 24 years," she says.

But will a large array of vitamins and organic foods staunch the exodus? Vikki says she's adding mainstream grocery items to the store's mix to keep from alienating former Safeway patrons. Still, the Natural Pantry will need to change its image to keep former Safeway customers coming through the door.

Vikki recognizes this as a challenge. "I'm not sure I have all the answers on that one, but we want to invite them in and we want to serve them."

Now, back to the bad news.

Adding to the University Center's woes is the fact that the Tennessee-based Regal Cinemas - the largest theater chain in the world, they claim - will exit their University Theater anchor space in November.

Gee says if the Hickel company can't entice a comparable tenant to replace Regal they'll take over the cineplex themselves, which is admirable, yet disconcerting, like finding a ship's captain tidying up the passenger cabins.

Raney Soucek, owner of the super-yuppie cookware store Habitat and a long-time University Center tenant, says she's going to be fine no matter what happens. That's because, in retail speak, Soucek's business is a "destination store," meaning her customers will make a special trip to the University Center to buy a new custom-patterned garlic press, whether she has an anchor store nearby or not.

"It's nice to have neighbors but it's not really necessary," she says.

* * *

Pinpointing exactly why - or when - the University Center began its freefall is like peeling an onion: Are online merchants siphoning business? Are there simply too many stores in Anchorage?

Are big box stores in outlying communities keeping more shoppers from the city hub?

Perhaps. "When the big box stores came in, the small vendors were the first to be hurt," says Gee.

One cause is clear: The University Center has been hurt by decisions made in boardrooms thousands of miles from the Old Seward Highway.

Take the space left by Pay and Save, a store which sold almost everything. For two decades the chain had a store in the University mall and in nine other locations around Alaska.

Then in 1992, the stores were acquired by Payless, another Outside chain. Two years later, Payless merged with Thrifty drug stores and became part of a 1,000-outlet chain. Two years after that, all the stores were gobbled up by Rite Aid, on its way to becoming the largest pharmacy chain in the country.

Meanwhile, Wal-Mart and Kmart were divvying up general merchandise dollars in Alaska. When rapid growth at Rite Aid led to culling, their Alaska stores went on the block. The space left empty at the University Center sits now like a bomb crater from the 1990s retail wars.

Rite Aid strategists may have considered the decision to eliminate 350 Alaskan jobs difficult, but it's doubtful they fretted over the fates of the small businesses that operated next to their stores.

There are currently 85 shopping centers in Anchorage, including the strip malls made famous by shady entrepreneur Peter Zamarello in the 1970s and `80s.

The University Center was the second of the five major malls in Anchorage, and judging by statistical indicators, it should be doing much better than it has lately. Gary Petros, a retail leasing agent for Prudential Jack White real estate, says Anchorage has the lowest retail vacancy rates he's seen since 1985.

Consumers also have more retail choices than ever before, and they're buying more as a result. While the space available for business in Alaska is about 40 percent below the national average for a city this size, Alaska ranks first among the 50 states when it comes to retail sales per square foot, according to a study by the Chicago-based National Research Bureau Census firm.

But look Outside and the University's nadir looks more like part of a trend.

There are roughly 45,000 malls in the U.S. Growth has been jagged over the past two decades, and new mall construction nearly came to a halt in the early 1990s, according to the National Research Bureau Census.

Today, in the midst of a booming economy and record employment rates, the shopping mall sector's growth inches upward at a snail's pace as malls compete with online merchants like and big-box chains like Barnes & Noble for foot traffic. In the next three years web sales are expected to skyrocket.

An annual report published recently by PricewaterhouseCoopers estimates one out of every five malls standing since 1990 will be out of business in a year. There's no way to predict which if any of Anchorage's five malls will suffer that fate, of course. But you might ask our nervous, lonely little friend the cockatoo, who's looking more like a canary in a coal mine these days.

© 2000 Anchorage Press

Links: link where this article appears, reprinted without alteration.

Mark Mitchell's Commentary

Posted April 20, 2009 (user submitted)

I'm the manager of the university Center mall in Anchorage Alaska. We have been 100 percent occupied since 2008. We still show as the only Dead Mall [on your site] in Alaska and that is no longer the fact. Come to Alaska and see the difference.

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