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Tracy Frank, Published August 31 2009

Light amid dark storefronts

Thirty-six years ago, people were excited about the opening of the Moorhead Center Mall.

“It meant getting more parking, the store hours were good, it was open on Sundays, and there was no sales tax on the Moorhead side on clothing,” said Eddie Gudmundson, who used to own Moorhead Drug in the mall.

Today, two out of every five storefronts in the mall are dark.

But mall managers say they’re working hard on a plan to fill those vacancies.

“There is a plan,” said Kristi Ulrich, the mall’s general manager. “The turn in the economy has put a few road bumps in it.

“Look at all the vacancies in strip centers” nationwide, she said. “There are vacancies like crazy. We aren’t out of the norm.”

The shopping center has lost several stores over the past few years, including Vanity, Claire’s, Canary’s Fashions, Kiefer’s Big Value and The Comfort Zone shoe store.

There were 46 merchants operating in the mall 11 years ago, 37 three years ago and 29 today.

Shoppers walking through the mall today will find 18 vacant stores, including Kim’s Hallmark, which just finished a going-out-of-business sale.

But existing mall businesses say they are destination shops for customers and are doing well despite the vacancies around them.

“Because our mall is a niche shopping center, our customers still come out,” Ulrich said.

And while there has been some store closings in recent years, other stores have opened in the mall.

Outdoor Bunker, an outdoor gear store that also sells firearms, was the most recent addition, opening May 1.

Michael Hoium, store manager, said the mall has been “absolutely a wonderful location.”

“I don’t worry about those dark stores,” he said. “We have a fairly specific clientele.”

Stores such as Herberger’s, considered the mall’s anchor store, and Maurice’s still bring plenty of people into the mall, he said.

“We don’t struggle for sales. There are still plenty of people who shop here,” Hoium said.

The specialty stores, known for their service, are going to be the ones to succeed coming out of a bad economy, he said.

Merle Norman Cosmetics in the mall is one of those specialty stores.

Mary Kay Fabre has owned the shop, which sells cosmetics and wigs, for 22 years. She said the current number of vacancies has not hurt her business, either.

“We’re on target to have our best year,” Fabre said. “More traffic would always be better. The vacancies – it’s no fun, there’s no doubt about it – but we’re not different from anyone else from what I gather. There are just no stores opening nationally. Chains have just put the kibosh on opening stores.”

She said Steve & Barry’s, an American casual clothing retail chain that carried the Sarah Jessica Parker clothing line, was slated to come in but then went bankrupt.

“It’s been a really tough situation,” Fabre said. “We had a real promising store coming in that was going to take 43,000 square feet. Then the economy tanked and they filed Chapter 11.”

Three years ago, majority ownership of the 216,000-square-foot mall transferred from TRE Investments to Moorhead Center Mall LLC, with Patrick Vesey and Kelly Zander as its managing partners.

Norm Feske closed his Pretzelmaker store in July 2008 after he heard that the mall’s managing partners had a store coming in that was going to take his space.

“I decided that I would rather do the closing on my own time rather than at their time,” Feske said.

Feske said the managing partners did not talk to him about the new store, but he saw a brochure being passed around by the business owners who owned their spaces in the mall that outlined the plans for a store to take a large chunk of space, including the space Feske rented.

Feske’s former space remains vacant today.

Feske ran other businesses in the mall in the past, including video stores and a jewelry store.

He ran the Sunshine Tree gift shop in the mall for 20 years until his lease was up and he decided to retire.

“It’s been a good mall over the years,” he said. “I hope they get somebody in the mall where it would come back to where it used to be, but I’m not sure that will happen.”

Despite the mall vacancies, there is no immediate impact to the city’s tax roll. That’s because the taxes are still being paid by Moorhead Center Mall LLP, which bought many of the vacant spaces at close to assessed market value, said Peter Doll, Moorhead manager of development services.

“It’s an owner’s choice what they do with their property,” he said. “If they chose to keep them black, dark, vacant until they get their certain clients, that’s private ownership in America.”

While the city may not be losing tax dollars, what it is losing is the short-term viability of commercial enterprise, Doll said.

“If people come here and see the majority of the stores are dark, there’s a perception there that we lack that vitality,” he said.

“Hopefully the long-term gain of a major private investment by a knowledgeable investor will have dividends,” Doll said, adding, “Knowledgeable people with backing typically don’t make frivolous investments.”

In the late 1960s and early ’70s, aging downtown buildings were demolished to make way for the mall.

It was a federal vision to tear down the old, dilapidated commercial buildings and build new ones that catered to cars, Doll said.

“The money came from the federal government backed with that vision,” Doll said. “Moorhead tore down a lot of its traditional downtown at that time.”

Moorhead Center Mall opened in 1973 with 44,000 square feet and seven tenants, including Palace Clothiers, Neubarth’s Jewelry and Moorhead Drug, which is still there.

Ronald Ohe, who died in 2005, was the mall’s manager and one of its original developers.

The mall expanded several times and, in 1983, Herberger’s moved into the former Eckstein’s Department Store. Herberger’s has also expanded several times, including a 1992 project that added a parking ramp.

Moorhead Center Mall is more complicated than most shopping centers. Several merchants own their spaces, and there are also merchants who rent space.

Another complication is that it opened as and remains a public/private partnership, with Moorhead City Hall occupying four floors above the mall in its northeast section.

City Hall is a square configuration because it was built directly on Fifth Street.

The city also owns the common areas, including the hallways and bathrooms, and has joint ownership of the parking lots, Doll said.

The former City Hall was demolished to make way for parking. It was built with the mall as an anchor, Doll said. Another anchor was First National Bank on the east end of the mall, where United Sugars is today.

More than $29.5 million went into the urban renewal project that included the Moorhead Center Mall, according to the mall’s Web site.

Of that, $9.5 million came from the federal government, the city spent more than $5 million and private investment amounted to more than $15 million.

Across the nation, shopping malls are struggling because they have a lot of common-area maintenance fees, which can cause conflict between the anchor stores that want discounts for attracting customers and the smaller shops that don’t want to subsidize the larger stores, Doll said.

That’s not the case here.

“The Midwest is bucking (the trend) a little bit because of the harsher elements,” Doll said.

Merchants operating in Moorhead Center Mall

Readers can reach Forum reporter Tracy Frank at (701) 241-5526