South Mall, under new ownership, on an 'upward path'

Jon Harris/The Morning Call - It wasn’t too long ago when the South Mall in Salisbury Township hit its low point. The roof sprang leaks and shoppers had to dodge water buckets throughout the mall’s promenade during the winter four years ago. Meanwhile, the mall’s marketing budget was nonexistent, and its website wasn’t even optimized for viewing on a cellphone.

Then-owner Pennsylvania Real Estate Investment Trust, or PREIT, dubbed it a “non-core mall” in its portfolio and unloaded it for $23.6 million in June 2014 to a group of seven New York-area investors.

It may end up being the best thing that ever happened to the 406,000-square-foot shopping center, putting it under control of a hands-on ownership group at a crucial time when online sales continue to chew up a larger portion of all retail sales.

“They’re in it for the long term,” said Rachel Berosh, South Mall assistant manager. “They’re not trying to flip it. They definitely are giving it the love and care it needs.”

Fast-forward more than three years since the sale, and several improvements have been made. For one, the mall has a new roof, meaning shoppers no longer have to play hopscotch around 5-gallon buckets catching the melting snowfall. The aging mall was freshened up with a new coat of paint on its exterior and also brightened up with a full LED light conversion inside and outside.

The mall also is putting on more events, such as last Saturday’s Santa Spectacular where shoppers and their children got to meet the big guy himself and see the mall’s new Santa display, just acquired from the now-defunct Schuylkill Mall near Frackville. The 2018 event list continues to grow, all part of a plan to give shoppers an experience and get them through the doors to see what the mall has to offer.

The mall still has plenty of stores, with more than 40 retailers and less than a handful of vacancies. Its most recent closure was Freeman Jewelers earlier this year — the retailer also closed its location at the area’s premier mall, the Lehigh Valley Mall in Whitehall Township — and thus far has been able to find replacements for most stores that have closed up shop. For example, Limerick Furniture & Mattress early this year filled some of the space vacated by Black Rose Antiques — the remaining space is being built out as a 20,000-square-foot gym.

While it hasn’t been easy, and questions are swirling around the mall’s largest tenant, The Bon-Ton, Berosh actually has run out of storage space.

“I’ve seen the ups and downs, and we’re definitely, finally, on an upward path,” said Berosh, a 36-year-old who has worked at the mall in one facet or another since she was 19.

Berosh and the staff — the property is managed by Metro Commercial and leased by KW Commercial-The James Balliet Commercial Group — are doing everything they should be to survive a difficult retail climate, but it’s still going to be a tough battle moving forward, according to retail expert Jeff Green, owner of Jeff Green Partners in Phoenix.

Green grades the South Mall as a C mall with great real estate off the interstate. By comparison, he considers Lehigh Valley Mall to be a B+ or A- mall from a national perspective, though it’s the strongest mall in the area.

The issues with C malls, Green says, are they have few anchors — South Mall has two: The Bon-Ton and Stein Mart — and community events don’t necessarily translate into sales at them. That’s because C malls typically don’t have a large enough selection of stores to convince event attendees to stick around and shop for a long period of time, he said.

South Mall does have, however, some things working in its favor. Aside from its location, Green commented on what he called an “excellent strategy” of exterior entrances at the mall. It gives South Mall a similar appearance to a power center, with outside entrances to retailers such as Petco, Staples and Ross, the latter of which offers off-price apparel and is a Wall Street darling after last week reporting a 4 percent uptick in third-quarter comparable store sales.

In addition to outside entrances, the mall also has given some tenants lit signage on the building’s exterior, facing Lehigh Street, noted James Balliet, president of the group handling mall leasing. For example, Yocco’s opened at South Mall last December and has exterior signage.

“They could survive,” Green said of South Mall. “They’ve already taken certain steps to morph a little bit into a power center.”

The biggest key to survival, however, could be an ownership group focused on South Mall. The mall ownership group, called Nicholas Park Mall, LLC, is led by Richard T. Krantz, a longtime retail executive who was once vice president of merchandise for Macy’s and, in 2007, founded consulting firm Church Hill Advisors.

While Krantz did not return a call and email seeking comment this week, Berosh said Krantz comes to the mall once a month, walking around and talking to tenants and learning of their needs. Krantz was at the mall last week, she said, and spoke about ongoing negotiations with The Bon-Ton, a debt-laden retailer that is planning to close at least 40 stores over the next year and is currently working with its landlords to bring occupancy costs more in line with sales.

Krantz is there often enough that even the cleaning lady has met him.

“She knows who the owner of the mall is, and that does wonders for people’s morale, especially all we’ve been through,” Berosh said.

But even after all the changes — in long-overdue maintenance, in store lineup and in ownership — Berosh keeps having the same conversation out in the community.

People will often say, “Ah, that mall’s falling apart.”

Berosh then asks them, “Well, when’s the last time you’ve been here?”

“Three years ago,” they’ll say.

Berosh then gets to smile — thinking of how South Mall is no longer a “non-core” asset — and reply: “A lot has changed in three years.”