Clovis News

New retail tenants revive vacant Valley stores

Less than two years after a retail bloodletting in the central San Joaquin Valley left a slew of department stores empty, a renewal is under way as those spaces fill back up.

In contrast to the dark days of the recession, communities are feeling a growing optimism as stores like Macy's, Kohl's and Forever 21 open across the Valley.

Even in places where stores remain empty -- such as three locations in central Fresno -- retail experts say there is hope. A deal is expected soon for the former Mervyns on West Shaw Avenue, for example.

"I think it's a positive sign that retailers out there are wanting to get back in the game and start making some moves," said Nick Rendino, a retail and investment specialist at CB Richard Ellis.

Visalia, for example, in many ways is better off than it was before Gottschalks and Mervyns went under, said Mayor Bob Link.

Last week, national craft and home decor chain Hobby Lobby announced plans to open its first California store in the former Mervyns in Visalia's Sequoia Mall. That announcement, coupled with Macy's October opening in a former Gottschalks in Visalia Mall, means the community has filled its major vacancies.

"The community feels that Macy's is a stronger retail entity than Gottschalks was," Link said.

And while Mervyns had many competitors in the region, Hobby Lobby will draw shoppers from outside Visalia, Link said. The store has the potential to tap 250,000 shoppers in the area, Link said.

The 59,283-square-foot Hobby Lobby store is scheduled to open before the end of the year and will employ 30 to 50 workers, said Vincent Parker, director of training and customer service.

The Oklahoma City-based chain has nearly 500 stores in 39 states, many of them in the South and East. It is making a major push to open new stores, with 26 scheduled to be open by the end of the year, he said.

Many retailers were considering expanding in Valley markets but waited until stores were available, Link and others say. The retailers then snapped them up cheap during the recession and will be ready for an economic turnaround.

Changing times

The climate was much grimmer in late 2008 and early 2009.

Mervyns began its liquidation sales in the days after Christmas 2008. The 149-store chain was hobbled by the bad economy and a private-equity deal that pushed up costs, which Mervyns attorneys said led to its bankruptcy.

Gottschalks, facing crushing debt, filed for bankruptcy and announced in April 2009 that it would liquidate its 61 stores.

The blows were particularly hard for Hanford Mall, which lost both a Mervyns and a Gottschalks as large anchor tenants.

Mall general manager Amy Brown said she worried about who would take their places.

"In this day and age there aren't a lot of anchors anymore, so we feel very fortunate that Forever 21 and Kohl's believe in the Hanford market enough to come here," she said.

Kohl's is scheduled to open Sept. 26, according to the banners on the building.

Forever 21 opened the first of its large-scale stores -- about 80,000 square feet -- in the Valley at the mall in July 2009.

It was part of the Los Angeles-based chain's shift to open larger, multistory stores.

The Hanford Forever 21 is the only one between Fresno and Bakersfield. It regularly draws shoppers from Visalia and other areas due to its popularity with young women.

Work also has begun on Forever 21 in the former Gottschalks space in Fresno's Fashion Fair mall that will open in February, according to the company. The chain plans to close its smaller store elsewhere in the mall.

Kohl's also has used the empty stores as a way to dive into other new communities, including Porterville and Clovis, where it plans to take over the former Mervyns in Sierra Vista Mall.

Still empty in the central San Joaquin Valley are two Mervyns and three Gottschalks locations. The Mervyns stores are at Blackstone and Ashlan avenues and on West Shaw Avenue. Former Valley Gottschalks stores in Manchester Center, Sierra Vista Mall and Oakhurst sit empty, too.

Making a deal

But the West Shaw Mervyns is very close to finalizing a deal for a new retailer, Rendino said.

He wouldn't identify the retailer, but said it's a national company that Fresnans will recognize.

The store, however, will only take about 50,000 square feet of the 77,000-square-foot Mervyns space, he said.

That's happening in Kohl's stores, too, with the company leaving 10,000 square feet empty in Porterville and Hanford.

Opening a slightly smaller store allows the retailer to make about the same amount of money and cut expenses, said Fresno State marketing professor Bill Rice.

"Right now most of the big guys are starting to realize that's a critical factor, especially with energy usage," he said.

And since landlords in this economy are desperate for renters, they're willing to make accommodations, Rendino said.

"There aren't too many tenants coming in that are going to take 50,000 feet," he said. "When you get a national tenant, they have the clout to dictate some of the terms that they want."

Other locations still are trying to land stores.

Leasing agents have been busy working on the former Mervyns at Blackstone and Ashlan, said Steve Rontell, a retail specialist and principal at Colliers Tingey International commercial realty firm in Fresno.

"We're narrowing down to one candidate," he said, adding that he expects an announcement within 45 to 60 days.

And former Gottschalks Inc. chairman Joe Levy is continuing to work on plans to resurrect Gottschalks in the form a new store -- Gottschalk by Joe Levy.

Levy and Sierra Vista Mall general manager Greg Newman said they still are working on opening a store at the mall's former Gottschalks, but a lease has not been signed.

Levy also has raised Oakhurst as a possible location for a store.

"We're still working on them," Levy said. "It's still in the works."

Levy has said he hoped to have the first store open by Nov. 1, but is now looking at before Thanksgiving.

National retailers also continue to be interested in the Oakhurst location, too Rontell said.

At the Manchester Center in central Fresno, management could not be reached to comment on plans for its former Gottschalks space.

That space may be difficult to fill as retailers would have to deal with the mall's diminished foot traffic or be strong enough to pull shoppers from other areas of town, Rice said.

Manchester and other central Fresno locations struggle with income and employment levels that are lower than in other parts of town with thriving retail centers, Rendino said.

Rice said he believes some retailers may be interested in taking over the empty locations, but are holding out for good deals on rent while trying to gauge when they need to have a store ready for when the economy turns around.

"They're all hedging their bets right now," he said. "How do they jump in at the right time to get the lowest possible rent?"