Sunday, October 26, 2014
Inquirer Daily News

Without an anchor, small businesses get moving

Bob McQuade, owner of Mobile 2 Mobile at the Collegeville Shopping Center, at the back door to his shop. Burglars recently broke that door.
Bob McQuade, owner of Mobile 2 Mobile at the Collegeville Shopping Center, at the back door to his shop. Burglars recently broke that door.
Bob McQuade, owner of Mobile 2 Mobile at the Collegeville Shopping Center, at the back door to his shop. Burglars recently broke that door. Gallery: Without an anchor, small businesses get moving

They include a 63-year-old barber, an optician, an immigrant-turned-pizza-shop owner, and a couple of small businessmen who opened stores after layoffs by downsizing employers.

They are tenants at the Collegeville Shopping Center - mostly local folks running mom-and-pop shops - and they are enmeshed in a recession-era web of misfortune brought on by the loss of their big anchor supermarket a few months back.

Theirs are not the only small businesses suffering as anchor stores vanish in a weak economy. But these merchants stand out because, with borough officials taking the lead, they have mounted a campaign to influence the large corporations that hold the future of this suburban shopping center - and its tenants' livelihoods - in their hands.

During the last month, the merchants have gathered 570 signatures on a petition urging Acme Markets to consider allowing another supermarket chain - one of its biggest competitors, Shop Rite - to take over the remaining four years of its lease.

Acme, owned by Minnesota-based Supervalu Inc., said it was actively marketing the property it vacated in February and would consider even the Shop Rite offer, which was submitted a week ago in writing.

The company denied claims in the petition that Acme wanted to block a competing supermarket from taking over the property to protect sales at its other stores.

"From a commonsense perspective, that's definitely something we need to be concerned about, having our business affected at Limerick," said Acme spokeswoman Taryne Williams. The company was concerned, she said, about making sure business at its Limerick location was strong enough to keep its workers there employed.

"However, on the flip side, that doesn't mean that we're averse to selling to a supermarket," Williams said, confirming that Acme had received the Shop Rite offer. "It's a deal that would have to make sense."

Collegeville Borough Councilwoman Andrea Baptiste said she began rallying merchants after Shop Rite owner Jim Madanci approached her earlier this year, saying he was interested in taking over the Acme site but was meeting resistance.

In an interview, Madanci said he and Wakefern Food Corp., the New Jersey cooperative that supports independent owners in the Shop Rite chain, submitted a $300,000 offer in writing last week to buy Acme out of its lease.

But if prior conversations about taking over the space are any indication, Madanci said, Acme may not be receptive. He said those overtures were rejected because Acme reportedly did not want to cede the 52,000-square-foot space to a chain that would compete with its Limerick store, about 31/2 miles away.

"I'm hoping that we might be able to negotiate something," said Madanci, a 12-year resident of Collegeville whose family owns a Shop Rite in West Chester. "The landlord wants us. They're working with us to get us the lease."

Australia-owned Centro Properties Group, which purchased the Collegeville Shopping Center and many others in 2005 from a local real estate investment company, said it was eager to land a new tenant quickly.

A few months after the Acme closed, Rite Aid Corp. shut its store adjacent to the empty anchor.

"It definitely hurts the smaller shop tenants, when you have a dark anchor," said Stacy Slater, senior vice president of investment management for Centro in New York.

Centro, which has a regional office in Conshohocken, is under pressure to generate revenue after struggling to refinance large sums of debt last year. As property values have declined across the globe, times have become tough for owners of retail real estate, and things are even harder with rent-paying retailers going out of business.

"It's a situation faced across the U.S.," Slater said. "Think about all the space that's dark . . . because you lost [bankrupt] Linens 'n Things and Circuit City."

Centro, however, is limited by what Acme chooses to do.

"They have control of their space for four more years on their current lease, and they have rights to exercise options for years thereafter," Slater said. Centro has been discussing the possibility of Acme's relinquishing control of the building, she said.

"We want, obviously, what's best for the center and what's best for our financial bottom line as well: for us to continue receiving rent for that space and to ensure that our small-shop tenants continue to perform," Slater said.

But time is not on the side of merchants like card-shop owner Ghanshyam Patel, who last week received his first "past-due" rent letter.

Like many small-business renters, he did not negotiate a lease provision allowing a rent reduction if an anchor were to leave. Now, his business has so deteriorated that he is inching toward possibly losing it before his lease is up next year.

"The way that things are going on, I cannot even pay rent," said Patel, 66, who started his Hallmark store, Collegeville Card & Gift, in 1981 after being laid off as a financial analyst at a large company. "I'm behind on rent about a month now. Sales have dropped dramatically."

Bob McQuade, 49, who sells Verizon cellular products at his Mobile 2 Mobile shop next to Patel's store, said he and his wife, Maria, were watching their business fall below break-even.

McQuade's rent is $3,000 a month - a premium reflecting his close proximity to the Acme. The couple are trying to hang on long enough for a new anchor, preferably a supermarket that would draw crowds sufficient to support the smaller stores.

"If we have to work seven days a week, we've done it before and we'll do it again," McQuade said.

Adding to the pressure is the fact that, in October, a Wegmans supermarket will open at the sprawling new Providence Town Center down the road, beyond the Collegeville border. That will offer even more reasons for shoppers to skip out on the struggling center.

"The smaller-shop retailers that are currently in Collegeville Shopping Center, they're in a center that has a vacant anchor that may or may never get leased, and if it does get leased, is it going to be a food operator? That's a big question," said Brandon L. Famous, the leasing agent hired by Acme to field offers for its vacant store.

Famous, chief executive of Fameco Real Estate L.P., also is in charge of signing tenants for the mega-center that will soon be home to Wegmans, Best Buy and others. He said he has been trying to recruit merchants at the anchorless Collegeville center to sign leases at the newer, more costly Wegmans site.

Acme "holds the cards" in deciding who can buy out its lease or sublease, he said.

To Councilwoman Baptiste, regaining a supermarket is vital to the health of the 1.6-square-mile borough's central shopping center and to Collegeville residents who have relied on having a neighborhood grocery store.

"I don't think it's unusual for the community to try and save itself," Baptiste said.

Mayor Al Stagliano, 63, opened Stagliano's Barber Shop in the shopping center 41 years ago and still runs it with his wife, Terrie, the council president. His business has held up well enough, he said, but the rest of the tenants have been hurt harder.

"We want a good anchor store," said Stagliano, "not one hand-picked by Acme."

 


Contact staff writer Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com.

 

Maria Panaritis Inquirer Staff Writer
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