New vistas? City leaders travel to meet with mall’s new owners
HARLINGEN — Early holiday shoppers were out in healthy numbers yesterday at Valle Vista mall, the troubled retail site recently purchased by a New York firm which specializes in managing distressed properties.
At Valle Vista, around 24 retail spaces were dark and shuttered yesterday, a slight uptick from six months ago when the count was 22. Two years ago, the storefronts which had been vacated numbered 19.
One of the mall’s major anchor tenants, Sears, is currently holding a going-out-of-business sale.
Yet officials believe the mall is such a critical component of the city’s retail infrastructure that they made a pilgrimage to New York recently to meet with the mall’s new owner to discuss its future.
A change of space
Mayor Chris Boswell, City Manager Dan Serna and Raudel Garza, CEO of the Harlingen Economic Development Corp., met with Mike Kohan, owner of the Kohan Retail Investment Group which bought the mall property for $12.5 million this summer.
Boswell said the trip was to welcome the investors to Harlingen and also to reinforce the importance of increasing retail sales — and sales tax revenues for the city — by drawing more people to the mall.
“ And that’s what Kohan Retail brings to the table,” Boswell said after returning. “They specialize in rediscovering retail space by creating their properties from the perspective of the consumer and what will attract them.”
Kohan’s investment group, which owns 26 mall properties, is intimately familiar with struggling malls on a national level. His vision, which he revealed in an interview with the Valley Morning Star in August, remains committed to redefining the concept of just what a mall is.
Instead of just national chain retailer outlets, he sees it as a place where doctors, dentists and other professionals can set up offices, bringing in extra traffic to support the retailers.
Other ideas include adding residential components to his malls in the belief all of these will generate traffic and sales.
Other potential for leasing spaces at the mall include “government offices, health care, auction houses, college, technical schools, and various forms of entertainment including an ice-skating rink,” Kohan said in a statement released by the city.
“ They are open to suggestions and opportunities and I think they’re going to explore anything that comes that makes sense for that space,” Serna said this week.
The vacancy rate at Valle Vista stands at about 25 percent, significantly above the national mall average of 9.1 percent recorded in the third quarter of this year, the Wall Street Journal reported last month. That national rate is the highest in seven years.
While many have blamed online sales for the decline in mall traffic and revenues — it no doubt has played a role — U.S. Census Bureau numbers suggest it is only part of a convulsively changing shopping landscape.
E-commerce, also known as the “Amazon effect” due to the massive footprint of one of the largest online companies, accounts for just 9.6 percent of all retail sales. However, that is a significant increase from five years ago, when it was 5.6 percent, or even a decade ago when online sales totaled 3.6 percent of all retail sales.
The poor financial health of the nation’s malls seems to be contradictory given the nation’s bullish economy and with consumer confidence at an 18-year high.
It appears consumers are still spending, just not at traditional malls.
Open to ideas
Both Boswell and Serna believe the Kohan group can turn things around at Valle Vista.
Serna made a point that the investors bought Valle Vista using some of their own funds, and thus have “skin in the game.”
“I liked the idea that they asked what we think and what we feel would be good for our community and what our community is ready for,” Serna said. “Because they’re not coming in with these preconceived ideas … I think having that attitude lends itself to working with us in the future.”