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Retail: Regional consumer sales face cooling-off period
Sunday, March 25, 2001 By Teresa F. Lindeman, Post-Gazette Staff Writer
The chill that settled over the Pittsburgh region this winter didn't stop construction workers from putting steel up for the new Mall at Robinson.
Shivers through the nation's retail industry haven't had a significant impact on the project, either, said Brian J. Ratner, senior vice president of East Coast development for the Cleveland-based mall developer Forest City Enterprises Inc.
Nearly 80 percent of the 1.2 million-square-foot, two-story enclosed center is leased, and everything's on schedule for the planned opening Oct. 26.
But even the most confident of developers is keeping an eye on the fallout from several months of slowing consumer sales. A tough holiday put several retailers over the edge and left some empty storefronts across southwestern Pennsylvania.
Montgomery Ward announced its demise just as the new year began. Since then, women's clothing chain Hit or Miss has given up, while Paul Harris has shut some locations. Frank's Nursery & Crafts has declared bankruptcy and Bugle Boy clothing stores began liquidation sales in mid-February.
In light of several difficult quarters, investors and developers are carefully watching chains such as Phar-Mor and Ames for signals on their ability to improve sales.
The region has so far managed to avoid some axes that fell elsewhere. For example, J.C. Penney singled out 50 department stores for closing, the company's second wave as it attempts to become competitive again. Here, the only change announced so far is the move of the Bridgeville store to a larger space in the new Robinson mall.
"I don't think there is major doom and gloom ahead," said Art DiDonato, director of retail leasing for Oxford Development Co.
Look for some new construction to continue in Cranberry, South Strabane and Monroeville. The Waterfront project in Homestead is scheduled this fall to unveil a new open-air, pedestrian-shopping area that will contrast with the huge structures already filled by Loews cinema, Target and Lowe's hardware.
Many retailers want to get into the Harmarville/Frazer area, DiDonato said. At least two major projects there have been announced but have had difficulties getting built.
Warehouse club Costco should arrive in Robinson and Cranberry soon. Both Wal-Mart and Kmart could add more superstores -- combined discount and grocery stores.
The arrival of brand new names into the market is likely to slow. Many retailers have begun taking a hard, second look at proposed locations.
"They expanded so fast, so quickly that I think they used up all their capital," said Mindy Suhoza, marketing director of the Monroeville Mall. "People are much more choosy."
Malls that dominate a particular market still have tenants waiting in line, although Suhoza said the list has gotten a tad shorter. Monroeville Mall just lost its Paul Harris store, but remains about 98 percent leased.
Ratner is heartened that chains such as The Gap still seem committed to his new Robinson mall. "Gap is pretty picky now," he said.
The new caution may slow efforts to fill some of the still empty big boxes that once held Hechinger and Builders Square hardware stores, Hills discount department stores and Service Merchandise outlets. They've been empty for more than a year.
Overall, DiDonato predicted the region's typically low vacancy rates could climb a bit.
In the last quarter of 2000, about 4.9 percent of the region's 41 million square feet of retail space was available for lease, according to commercial real estate firm Grubb & Ellis Co.
A controversial retail and entertainment upgrade proposed for Downtown could have added several hundred thousand square feet of space, but planners have tossed the original sketches out and are starting from scratch. The new Lord & Taylor department store, which opened in the former Mellon Bank building late last year, may be the last grand opening there for awhile.
In the meantime, retailers will continue their fierce battle for the region's customers.
Ross Park Mall drew crowds over the holidays after unveiling the results of a yearlong, multimillion-dollar remodeling that also brought in several new stores.
This year, expect Monroeville Mall to strike back. A planned face lift should give it a more upscale feel. Suhoza wouldn't release more details of the plan, but she said the mall has to keep up with its cross-town neighbors. "We've got to stay competitive in the market."
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