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Small Businesses Hold a Misconception That Malls Wouldn’t Want Them

October 11, 2023

“We thought the mall was above us, that we’d never be able to get in,” recalled Peter Flores. Though he and his partner had a flourishing gig selling hard-to-find Nikes and Jordans online and to other resale stores, “we figured we wouldn’t do enough volume to make it make sense,” Flores said. They also fretted that malls wouldn’t accept a brand-new company as a tenant.

Mall leasing agents combat such misconceptions daily. “We are looking for local and regional players every day,” said JLL Property Management managing director of retail agency leasing and development Paul Chase. “They’re important to bringing that local flavor and those uses that shoppers want.”

Flores and his partners had been looking at Columbus, Ohio, where sneaker culture is strong, he said, but that would mean the added cost of finding a place to live there, so they started looking into other options. “We remembered the Glenbrook Square mall in Fort Wayne, Indiana,” Flores said. “I remember going there as a kid and loving it.” Fort Wayne is the second-largest city in Indiana, and Glenbrook Square is a regional mall that covers 1.3 million square feet and is anchored by JCPenney, Macy’s and Barnes & Noble. Flores described the mall as the hub of northeastern Indiana. “There’s got to be a market there,” he and his partners figured. Skeptical that the leasing agent would return his call, he took a chance, and to his surprise, the leasing agent was encouraging and didn’t mind that the business didn’t have a long history to fall back on. Flores said: “They told us a number for rent, and we were like: ‘You know what? That sounds doable.’”

The store, Laced Midwest, just celebrated its second anniversary at the mall. It turned out being at the mall was one of the best business decisions they ever made. On opening day, Sept. 10, 2021, the store nearly sold out its inventory, and in April, the partners opened a second store, at Southlake Mall in Merrillville, Indiana.

Malls Need to Get the Message Out to Small Businesses: We Want You

Despite the doubts small business owners may have about their value to landlords, their stores can mean big business for malls. CBL estimates its tenants include 1,300 to 1,500 small businesses, vice president of corporate communications Stacey Keating said, adding: “Small businesses add such a unique element to the mall that customers usually can’t find elsewhere.”

The problem is that entrepreneurs don’t know malls have programs to help first-time-in-a-mall store owners. Some malls rent pop-up carts, kiosks or even in-line spaces for just a few weeks so small businesses can test the location, their merchandise or staff levels. Some malls reduce rent for the first year for small business owners or offer leasing options that aren’t multiyear commitments. “It’s a secret to a lot of people in this world,” said CBL director of specialty leasing and advertising Nicole Burney.

It was a secret to Brandy Madden, owner of Penny’s Lemonade. The business was popular in Chattanooga, Tennessee, events, farmers markets and even a local grocery store. “We have a great following,” she said, but she thought malls, especially big regional malls like CBL’s Hamilton Place were out of her reach. “I didn't think we would ever be in a mall.” In February 2022, she saw a social media call for small business owners to participate in a new Black Owned Business Expo, a one-day pop-up shopping event at Hamilton Place. It was meant not only to introduce the community to small businesses but also to introduce small business owners to opportunities at the mall. Madden signed up and was overwhelmed by the number of shoppers who came to her booth.

Madden returned for the second Black Owned Business Expo in February 2023. She said CBL is supportive. “They never give us any backlash of saying: ‘Oh, you’re a small business. You’re not a big business. We don’t have the time of the day for you.’ They look at us just as a business, and that’s what small businesses need. We may not be a big business yet, but we need to start somewhere, and we need someone to give us the opportunity.” And because of CBL’s mentoring and hand-holding through the leasing process, Madden’s “vision has grown bigger,” she said.

Small Businesses Aren’t for All Malls, but Now Is the Best Opportunity to Get into the Others

Many malls may welcome small businesses, but not all. “There are rock star malls that do thousands of dollars per square foot in sales. Mom and pops or independents don’t have a prayer of getting in there because they don’t have the leverage,” said Azor Advisory Services founder Beth Azor. They don’t have the history, and they don’t have the financial statements.” Indeed, there are waiting lists for national retailers to get into those locations, she said.

But small businesses “probably have the best opportunity in the history of malls” to get into other malls, she said. “The rise of the interest in small businesses has really shot up, especially since COVID. Think about how many big companies like Visa and Amex are [pushing the message of] ‘Shop local.’” At the same time, a lot of national retailers like Foot Locker and Bath & Body Works are leaving malls for open-air centers, Azor explained. “They all want to be next to the Whole Foods or the Ultas or the Sephoras.”

Small businesses are in high demand to fill vacancies in these centers and have more leverage and opportunity, Azor said. “They can dip their toe in [to the mall space]. They have less rent, less deposit, and many of the spaces are already built out with dressing rooms, so they don't have a big financial investment outlay.” Small businesses without track records can establish themselves at these properties and get good references from landlords if they later want to move.

Enclosed malls were not on Diana Hlywiak’s dance card when Azor reached out on behalf of downtown Cleveland’s Tower City. Hlywiak and her husband, the owners of Apple Jax Toys, were happy with their pair of 1,000-square-foot locations in the Cleveland suburbs. Though Hlywiak had fond memories of malls herself — “My husband and I loved KB Toys when we were kids” — Azor had to call twice before they agreed to check out Tower City. Once inside, though, they understood the mall’s appeal: more square footage, the opportunity for complementary cross-traffic like the Star Wars-themed restaurant moving in across from them and a marketing team spending millions on events and advertising to bring people to Tower City. At the two other Apple Jax locations, “we put on our own makeshift events,” she said. They signed a two-year lease for 5,000 square feet and are scheduled to open in November. “We’re excited,” Diana said. “There’s a lot of people walking through” Tower City.

It’s stories like these that leasing agents hope will leave an impression on small businesses. Sometimes the biggest barrier to small business owners’ success in a mall is their own mind-set. “All of these obstacles — there are ways to overcome them,” Chase said. “If they have great merchandising and they have great products, most shopping center owners will want them.”

By Rebecca Meiser

Contributor, Commerce + Communities Today and Small Business Center


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