First White House Black Market closed its flagship clothing store in February. Shortly after, the Aveda beauty store and J. Crew declined to renew their leases and moved out. And then Origins also closed its store.
The Harborplace & The Gallery shopping complex at Baltimore's Inner Harbor has been losing some of its highest-profile tenants as the recession has driven retailers to downsize and close underperforming stores to deal with a drop in consumer spending.
The economic climate is hitting shopping centers all across the country, but downtown areas like Baltimore, where retailers tend to have smaller, less profitable stores, can be harder hit and more vulnerable than larger suburban malls during slow economic times like these, retail experts said.
Downtown Baltimore shopping is challenging even during good times because it is dependent on tourism and downtown office workers who go home on weekends and in the evenings, said William P. Ferrell, a principal with Trout Daniel & Associates commercial real estate brokerage in Baltimore. A store like a J. Crew might not make as much money in The Gallery as in a suburban mall, Ferrell said.
"Really, people from outside of downtown don't shop there except for the specialty stores," Ferrell said. "Joe Blow from Chicago has J. Crew down the street at home so there's not a reason for them to shop there. That mall is always going to have challenges."
General Growth Properties Inc., the Chicago-based mall owner that is operating under bankruptcy-law protection, is known for running its properties well, and its problems stem more from debt than from the quality of its malls, retail experts said.
"I think everyone understands that the malls themselves, which generally are top-rated, are going to be there," said Howard Davidowitz, chairman of Davidowitz & Associates, a retail brokerage and consulting firm in New York. "The creditors are not going to be crazy enough to destroy the value of the malls."
The vacancy rate at The Gallery & Harborplace has grown to 6.8 percent in June, up significantly from 1.5 percent the second quarter of last year, according to research firm Costar Group. Arundel Mills in Hanover has a 1.2 percent vacancy rate, while Towson Town Center has a 7 percent vacancy rate. Towson just opened a new luxury wing that may be skewing the numbers.
