Tax credits suggested to revive blighted N.J. strip malls

In one strip mall after another along the Burlington County section of Route 130, motorists are pulling into parking lots to find pizza places and furniture stores shuttered, with lease signs posted on their windows.

"The store next door has been vacant for three years," said Frank Vakil, owner of Harker's Flowers in Cinnaminson. "We used to have 700 to 800 cars coming into the center a day. Now maybe it's 200."

The entire retail sector has struggled since the recession began in 2007. But strip malls, those quintessentially American structures that line roads from New Jersey to California, have been especially hard-hit.

In New Jersey, where the strip mall is a defining facet of the suburban landscape, Assembly Democrats Linda R. Greenstein and Wayne P. DeAngelo, who represent a district in Mercer and Middlesex Counties, plan to introduce a bill that would offer tax credits for the refurbishment of distressed shopping centers as part of an economic stimulus plan.

DeAngelo has watched his district suffer from a cycle of new developments opening and promptly putting older developments out of business.

"The residents are always asking, 'Why are you building a new strip mall when there's an old, blighted one down the street?' " he said. "We're trying to deter people from building new ones. Construction is going on at new facilities as we speak."

The vacancy rate in U.S. strip malls rose to 10.9 percent in the second quarter of this year, according to commercial real estate analyst Reis Inc. The rate for shopping malls was 9 percent.

That followed a period of rapid expansion in the 1990s and 2000s, when developers were jumping over one another to build shopping centers, often around national chain anchors, said Jesse Tron, spokesman for the International Council of Shopping Centers (ICSC).

"In boom times, some of the big retailers could carry the slower-producing retailers, but not anymore," he said. "One of the issues with this recession is with retailers demanding so much space. But maybe you don't need to provide it."

The design of old shopping centers does not fit what retailers are looking for these days, said David Silver, director of corporate marketing for Levin Management, a shopping center development and management company in Somerset County.

"What's in fashion now has been in fashion for 10 to 15 years," he said. "The look has changed. There's more parking, and everyone wants that stuccoed surface."

Over the first eight months of the year, the retail sector showed some improvement, with chain stores reporting an average monthly sales increase of 3.6 percent, according to the ICSC.

But shopping center rents are still down, presenting bargains to business owners who are holding their own.

Heidi Roistacher, the marketing manager of Pro-Adjuster Chiropractic Clinic in Cinnaminson, said she and her husband, Jeffrey, were moving the clinic a mile up the road to a larger space in a new development where the rent was cheaper.

"The owners are really bending over backward to fill their strip malls," Roistacher said. "They're waiving rent while you're [renovating]. It wasn't very hard for us to find space."

But those whose businesses are struggling continue to worry.

Vakil, who was three years into earning a doctorate in international relations at the University of Pennsylvania when he quit to open his first flower shop, looks at the deluge of new shopping centers extending up and down Route 130 and fears for his future.

"We have four dry cleaners in a one-mile stretch, and that's just one example," he said. "For the size of the population in this area, we are overly commercialized."