When it opened in the mid-1990s, the Hanford Mall was seen as pivotal moment in Hanford shopping history. . For many, it demonstrated the city’s up-and-coming growth potential and provided a psychological boost.

But the heyday of indoors malls seems to have passed. A variety of factors are creating hurdles for the Hanford Mall and others like it.

Any Google search with the word “malls” yields dire stories about the problems indoor malls face. Most of the accounts mention malls that have died – an eerie image favored by Hollywood cinematographers, as evidenced in the dead mall scene in the recent movie “Gone Girl.”

The Hanford Mall is by no means dead. The vacancy rate, as measured by square footage of available space, is approximately 10 percent, according to Mall Manager Joanne Doerter.

Officials at Passco, the commercial real estate investment firm that owns the Hanford Mall, couldn’t be reached for comment by deadline.

The 90 percent occupancy rate places the mall right at the break point between what is considered healthy and unhealthy, according to a New York Times report. Malls with vacancy rates of 10 percent or lower are considered healthy, the Times story stated, adding that roughly 80 percent of malls are in this category.

About 15 percent of U.S. malls have vacancy rates of 10 to 40 percent, with 3.6 percent suffering vacancy rates of 40 percent or more, according to the report, published in January.

Part of the explanation for the challenge to indoor venues is the competition from other types of shopping centers that offer consumers a different experience.

The elephant in the room is the super-popular River Park development in Fresno, the sprawling outdoor shopping center (not enclosed like the Hanford Mall) that inspires comments about parking headaches but remains the go-to regional destination that has pulled customers away from other Fresno malls – and probably the Hanford Mall too.

River Park is what’s known in the business as a “town-square” mall. Part of it tries to mimic a classic downtown environment with a grassy square, shops around the perimeter and a shiny movie theater at one end.

John Kashian, a Fresno developer whose father, Ed Kashian, was involved in the creation of River Park in the late 1990s, said the center had originally been planned as an indoor venue, but switched to the strip mall/town-square concept because he and others involved in the project thought the market was moving in that direction.

“It was the power-center outdoor tenants that were doing deals,” he said. “The indoor mall, I don’t know when the last one was built.”

Kashian said indoor mall leasing space often costs more because tenants share the cost of maintaining and air conditioning the whole structure. He also cited the increased visibility and access stores enjoy when their doors face outward onto a parking lot rather than inward inside an enclosed mall.

Kashian said that customers do Internet research on a specific store, then go there knowing exactly what they want. That trend favors outward-facing storefronts.

Some analysts offer a grim prognosis for the kind of mid-level, not-super-upscale venue represented by the Hanford Mall.

One of the more pessimistic experts is Howard Davidowitz, a retail consultant who expects as many as half of the 1,200 functional U.S. malls to fail in the next 15 to 20 years.

Davidowitz chalks a lot of it up to what he sees as the shrinking of the middle class in the years following the 2008 financial crash. He thinks that upscale malls, which cater to socioeconomic groups less affected by the recession, are doing the best.

Davidowitz believes the recession has been particularly unkind to department stores like JcPenney and Sears that target middle-class incomes. He noted the financial struggles of both companies, which maintain anchor tenant locations at the Hanford Mall.

The mall lost anchor tenants Mervyns and Gottschalks during the recession, but replaced them with Forever 21 and Kohl’s – two companies whose financials look good.

All of this leads up to a discussion of what the Hanford Mall can do to make sure it doesn't fail.

One strategy management employees have pursued is filling vacancies with stores that come in during the holiday shopping season, then leave. Past examples include Toys”R”Us and Hickory Farms.

The mall also incorporates Big 5 Sporting goods and Ross – not stores you would typically find in an enclosed mall. In a way, they function as mini-anchors, pulling in more customers than smaller retail outlets.

But, according to Davidowitz, that’s a double-edged sword.

By pulling in discount shoppers, Ross-type stores may ironically drive out high-dollar chain retail outlets that pay higher rents, he said. Discount retailers may also undercut anchor department stores.

Davidowitz said it would be great if the mall could add on a Costco. Based in New York, he didn’t know that Hanford is slated to add a huge Costco development on the eastern edge of town.

If JcPenney or Sears closes their Hanford stores, the mall could reinvent the space as an entertainment draw, according to Kashian. He noted that Sierra Vista Mall in Clovis has converted one of its former anchor locations to a go-cart venue.

Davidowitz had other suggestions, such as adding a grocery store, bringing in more Ross-type retailers or offering a full-service, walk-in medical office. Failing that, some mall landowners have demolished whole structure and converted it into an industrial park.

Jesse Tron, a spokesman for the International Council of Shopping Centers, wasn’t quite ready to write the obituary for indoor malls.

“Are there certain properties that have closed? No doubt, but the national picture is, malls are doing incredibly well,” Tron said.

Tron said that many thriving malls combine a variety of aspects that go beyond the standard enclosed mall space. Malls that succeed, he said, are often “experience-driven destinations,” offering attractions like amusement rides, or – as in the Sierra Vista example – a go-cart track.

“I think you’re going to see a blending,” Tron said.

He disagreed with the claim that only high-end malls are flourishing. He said that profit margins might be lower for a place like Hanford Mall, but it may still be economically viable.

The reporter can be reached at 583-2432 or snidever@hanfordsentinel.com. Follow him on Twitter @snidever.

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