Monday, May 11, 2009

Zombie Bay Area Shopping Centers

The San Francisco Chronicle reports Empty big-box stores drag down their neighbors

The retail area in Dublin near the 580 and 680 freeways looks like it's halfway to becoming a ghost town.

A slumping economy has transformed part of this city, where Mervyns, Circuit City and Expo Design Center have all closed recently, into an extreme example of the malaise affecting shopping centers across the Bay Area.

The retail exodus is forcing some cities to scramble in the face of lost sales tax revenue at a time when money is already tight. Meanwhile, they're grappling with how to resurrect the zombie neighborhoods, where many of the remaining merchants complain about declining foot traffic and the eyesores of buildings plastered with "for lease" signs.

"It feels abandoned and lonely," said Rachelle Forrest, assistant manager at the Floor Store, a flooring shop in Dublin that is encircled by shuttered businesses.

Dublin, a relatively prosperous East Bay community of 47,000, has long been a retailing hub. During the most recent boom, Dublin added several new shopping centers on its outskirts, supplementing older strip malls downtown. As the economy soured, that older core, along Dublin Boulevard and San Ramon Boulevard, started to empty out.

The victims are a who's who of failed and struggling retailers. Mervyns closed around the holidays, followed by Circuit City and Home Depot's Expo Design Center. Anderson's TV, Don Sherwood Golf & Tennis World and a couple of mom-and-pop retailers have also pulled out. A Good Guys store that shut down a few years ago is still vacant.

In one parking lot, a visitor can see four empty storefronts by simply turning 360 degrees. Building facades have been stripped of signs, making it difficult to tell which retailers once called this area home.

Similarly, Antioch's Somersville Towne Center mall is suffering after the departure of an array of retailers, with one anchor, Mervyns, gone and another, Gottschalks department store, planning an exit. In Tracy, the West Valley Mall - owned by bankrupt parent General Growth Properties - has a number of closed shops, and the Gottschalks there also plans to close soon.

Linda Maurer, economic development director for Dublin, said she still believes the area where empty stores abound remains a beacon for shopping. She pointed to its high-profile location near the intersection of Interstates 580 and 680, the heavy street traffic and a BART station scheduled to open in the neighborhood next year.

"Maybe we're putting on our rose-colored glasses, but that's still a very attractive place to be for retailers," Maurer said.

Yes, Linda. You are wearing rose-colored glasses.

Restoring the area's luster could take two years, she acknowledged, and not just because the economy must first recover. The vacancies are garnering some interest, she said, but ultimately the companies say the buildings are simply too big.

Maurer suspects that the cavernous stores will have to be subdivided or razed and replaced.

In the meantime, the loss of sales tax revenue, combined with a drop in residential property values, is eroding Dublin's coffers. A $3 million deficit is projected for next fiscal year, up from a $2.5 million deficit this year, making for tough choices over which programs to cut.

She is right…it could take two years. Or ten.