As Steeplegate Mall struggles, other nearby retailers thrive

  • An entrance to the Bon-Ton Mens and Home Store is seen at the Steeplegate Mall in Concord on Thursday, Feb. 1, 2018. The retailer announced it is closing both its stores. (ELIZABETH FRANTZ / Monitor staff) Elizabeth Frantz

Monitor staff
Thursday, February 01, 2018

Wednesday’s news that struggling retailer Bon-Ton will close its stores in the Steeplegate Mall has focused attention on a puzzling business question: Why is the mall doing so poorly when other retail businesses on the Heights seem to be doing so well?

“The mall has not had a noticeable downward effect on the properties around it,” said Carlos Baia, deputy city manager for Concord. “If you go to any community where you see a large mall that starts to have problems, typically you see abandoned properties nearby. But this has one of the lowest vacancy rates of any major commercial corridor around.”

Indeed, directly across Loudon Road from Steeplegate, a strip mall built two years ago is thriving and being expanded.

It may be that Steeplegate, which has been trying to stem the loss of retailers for a half-dozen years, is facing an almost unavoidable decline due to forces beyond its control and will have to reinvent itself.

“There’s a definite trend in retail that has been going on for some time – part of it related to internet sales, part of it related to shopper preference in terms of types of retail environment. That’s very hard to control,” said Tim Sink, president of the Greater Concord Chamber of Commerce.

By “types of retail environment” Sink means enclosed malls, as compared to open mall-like centers such as Tanger Outlets in Tilton, or stand-alone stores like the Home Depot and Target located a short walk from Steeplegate.

Enclosed malls, especially midsized malls such as 480,000-square-foot Steeplegate, have been fading for the past decade along with the decline of department and general clothing stores, which tend to be their biggest anchor tenants.

Bon-Ton is an example of a retail firm having trouble coping with change but so are the other two stores that anchor Steeplegate: JCPenney, which flirted with bankruptcy two years ago, and Sears, which this week cut 220 corporate jobs in an attempt to stem losses. Both of those chains have closed stores around the country recently and plan to close more of them this year.

As a result, malls all over the country are struggling with the loss of anchor tenants like Bon-Ton.

“It’s happening everywhere. The better operators are being very aggressive, very creative about it ... deciding how to change,” said attorney John Sokul, who is head of the real estate group at Hinckley Allen and specializes in shopping centers.

And while not all malls are struggling – the Mall of New Hampshire in Manchester and Pheasant Lane Mall in Nashua, both owned by Simon Properties, the nation’s largest mall owner, appear to be thriving – many are looking to shift away from the traditional model of depending on retail alone to draw customers.

“They’re adding sports-oriented, health- and wellness-oriented, or medical centers. We’re seeing a lot of midmarket malls even go industrial ... for last-mile distribution; smaller, more nimble distribution centers. I could see somebody using some of that space for warehousing, distribution,” he said.

Sokul noted that one property in Seabrook even turned itself into an indoor go-kart track.

Steeplegate was bought in 2016 by Namdar Realty of Great Neck, N.Y., after former owner Rouse Properties defaulted on a $47 million loan payment and turned ownership over to the bank. Namdar buys “underperforming” shopping centers and enclosed malls throughout the country. Namdar did not return a call seeking comment Thursday, and the mall’s management declined to comment.

Namdar bought Steeplegate for the cut-rate price of $10.3 million and promptly subdivided it, turning the separate Applebee’s restaurant and TD Bank buildings into separate properties whose value is less likely to be hurt by the mall’s problems. The mall itself, on 50 acres, is now assessed for $10 million by the city.

And while Steeplegate has seen a couple of nontraditional tenants arrive, most notably the Hatbox Theatre, it has not been able to change the long trend of stores leaving and spaces remaining empty. Even Dunkin’ Donuts has left, as chain restaurants pop up all along Loudon Road.

Baia of City Hall said Concord had hope for the property.

“It’s in good shape – it’s not that old. Whether it has to be a shopping mall as we know it today in the future, I don’t know, but developers are looking at these types of properties. There could be mixed-type uses, maybe residential with some retail, other service,” he said.

The site is zoned gateway performance, a zoning type often used for big-box stores and large retail outlets, but that could change, Baia said.

“The city, we’re ready to come to the table and work with whoever wants to redevelop this property,” he said. “We have reached out to representatives ... Saying we’ll brainstorm with you, try to do something with you if you decide that standard retail is not the way you want to go.”

Sink, of the chamber of commerce, said that even in changing times a large mall can be an important part of a local economy.

“Concord has a strong retail economy, and we want to offer choices to visitors who want to come and shop in tax-free New Hampshire. One of the advantages that Concord has is variety – boutique shops in downtown and popular chains on the Heights, including the mall.” he said.

Would it hurt if Steeplegate closed, he was asked?

“I would see it as a definite downside,” he said.