Rent hikes force local businesses out of Barracks Road Shopping Center

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Lloyd’s Hallmark, a Barracks Road Shopping Center staple for 40 years, has closed its doors to make way for a PeachMac. Photo: John Robinson Lloyd’s Hallmark, a Barracks Road Shopping Center staple for 40 years, has closed its doors to make way for a PeachMac. Photo: John Robinson

Local merchants at Barracks Road Shopping Center are trying to stay optimistic about their future. But mom-and-pop shops are dropping like flies at the city’s oldest shopping mall. Lloyd’s Hallmark, after more than 40 years at Barracks Road, closed in January to make way for PeachMac, an Apple resale store. Peace Frogs, Shenanigans, and Lynne Goldman Studio have all packed up and left, Blue Ridge Mountain Sports is moving to Stonefield, and even business owners who can still afford the rent are keeping cheaper options in the back of their minds.

Federal Realty Investment Trust acquired the property in 1985, and has recently been making gradual changes, bringing in franchises like Ulta and Chipotle. Senior Director of Asset Management Deirdre Johnson said the company is only responding to customers’ needs.

“For more than 50 years, Barracks Road Shopping Center has been the top destination in Charlottesville for shopping and dining. As the community has evolved, so has our customer’s desire for popular, new retail and restaurant concepts,” she said. “We value our relationship with our merchant community and endeavor to create a retail environment that supports their long-term success.”

But business owners and customers fear that rising rents and a lack of communication between the landlords and merchants is robbing Barracks Road of its traditional character and turning the 55-year-old shopping center into just another strip mall.

Keith Rosenfeld has been serving up baked goods, coffee, and gourmet meals at HotCakes since 1992. The cafe is located between CVS Pharmacy and Kroger, which he said is an ideal location for foot traffic and return customers. Like most of his neighboring merchants, Rosenfeld said he can’t imagine working anywhere other than Barracks Road. But as pained as he is by the recent exodus of his peers, competitors, and friends, he said he understand why the changes are happening.

He said Charlottesville’s supply of independently owned shops has exceeded the demand, which he described as a “microcosm for what’s happening all over the country.” Local shops are being driven out by the big guys everywhere, which he said is definitely a problem, but may be unavoidable.

“There’s no question that Federal Realty runs a great shopping center,” Rosenfeld said. “And for now at least, it’s got a lot of character from some of the independent speciality stores. But when you have chain after chain, you could wake up and not tell if you’re in New Jersey, Long Island, or Charlottesville.”

Disputes between merchants and their landlords are certainly not new in the retail business, Rosenfeld said, and tensions began rising with the recession four years ago. Federal Realty appointed Rosenfeld as a consultant, in hopes that a liaison between them and the business owners might be able to smooth things out and improve communication. And for a couple years, he said, it worked.

“They developed an ear to listen for that period of time, communication was much better, and merchants felt more appreciated,” he said. “At the same time, I think the merchants got exposed to some of the issues that Federal has, and the realities of being a New York Stock Exchange listed company.”

Unfortunately, it didn’t stick. Communication between business owners and Federal Realty, according to some tenants, has again diminished, leaving businesses both frustrated and frightened.

For now, Rosenfeld and his chocolate tortes are safe. Rent has increased significantly, he said, but the store has survived by cutting employee hours, using fewer phone lines, and scrimping wherever possible. Leaving Barracks Road is the last thing he wants to do, but he said it’s “certainly something to think about.”

Rosenfeld said property owners like Federal Realty need to “face reality” and decide what they want their shopping centers to look like so merchants and customers can adapt.

Steven Metz, co-owner of Lynne Goldman Elements* (formerly Lynne Goldman Studio) believes his former Barracks Road landlords have made it pretty clear what they want the shopping center to look like.

“I don’t think Federal Realty has local businesses in their long-term plans,” Metz said. “They’re putting their money where they feel is best.”

Metz and his partner Lynne Goldman opened the doors of their new Downtown Mall location in early February, a move that he said wasn’t easy but was probably for the best.

“We didn’t find them very easy to work with,” he said of Federal Realty. “We’ve been so welcomed and supported Downtown, and we’re really happy with the choice we made.”

Mitch Diehl ran London’s Bathecary, located next to Banana Republic, for four years.

“For the first year and a half, we did phenomenal business,” he said. “And then they opened a 16,000 square foot Ulta Beauty right in front of our face.”

Diehl said Federal Realty charged the shop more than $5,000 a month for 1,200 square feet of space. Between the rent and the new nearby competition, remaining in Barracks Road is no longer an affordable option, and the shop’s windows are covered in “Everything must go” signs.

The decision to leave wasn’t easy, Diehl said, but the process of finding a new home has been smoother than expected. Property managers of the Downtown Mall and West Main have been great to work with, he said, and negotiating for a spot at Stonefield has been surprisingly easy.

“Stonefield is really receptive to small local businesses,” he said. “I’m just happy to see that there’s opportunity for local businesses right now.”

The shop has a new lease in hand, he said, and is just waiting on paperwork from Federal Realty.

Diehl said he can’t imagine how the old-timers must feel now that they’ve been pushed out.

“To have Hallmark out after 40 years, and Shenanigans out after 35—those stores wouldn’t be leaving if it were possible to survive,” he said.

Deirdre Johnson said Federal Realty still values diversity in the shopping center, despite all the changes.

“We strive to provide our customers with a unique balance of local, regional and national retailers and the property is currently 97 percent leased,” she said. “We will continue to offer the Charlottesville community shopping and dining options that fulfill their needs while creating a destination for everyone to enjoy.”

 

Lynne Goldman Elements was incorrectly identified as “Lynne Goldman Suites” in the 2/26 print issue of C-VILLE Weekly. 

  • Jim Rockford

    ms. johnson should always remember the axiom that
    you don’t need to explain; what you don’t say.

    keeping that in mind ; ms johnson says quite a lot.
    can she provide support for much of it ?

    johnson is quoted as saying ..”the company is only responding to customer needs …”

    are we to imagine our community asked for the always on sale; what is the real price
    who owns this store oriental rug merchant ?

    our community changes…i think ms. johnson’s use of “evolve”is best saved for another conversation.

    ms. johnson is quoted in part..”our customer’s desire for popular new retail
    and restaurant concepts…”

    i would think people want good food ; not a concept; and the tulip craze in holland
    a few years ago determined popularity is not the best idea in purchasing goods.

    regarding popularity; can ms. johnson determine with the vanguard admiral real estate
    reit ; has federal realty in its top ten holdings anytime in the last few business quarters ?

    i think vanguard index funds would be a an excellent benchmark for “popularity”
    after all ; the index is the market itself.

    ms. johnson goes on to say …”we value our relationship with the merchant community..”
    that might be true; certainly on a national or regional level.
    i am sure any number of those companies with multiple brick and mortar stores
    are on a wait list for this market.
    however actions speak louder than words and the disappearance of shenanigan’s
    of lynne goldman; says something else.

    that it is easier for a local merchant to deal with the reit that manages stonefield
    says a great deal.

    mr ruggerio is attempting to take back barnes and noble; it is a business model
    that is shrinking its physical footprint.
    if successful he will be asking for the best real estate deal; barnes and noble
    does not need to be in barracks road ; our community will shop wherever it
    may be located in the future.

    glenn murphy has been successful reviving the best days of the gap and mickey drexler.
    he has done so by responding to customer needs……in china; expanding the presence
    of it on line only division ; and actively looking to shrink the footprint of its old navy division.

    old navy can relocate anywhere else in our greater community; as ms. johnson is aware
    along with its banana republic division.

    will ms johnson who speaks of the “unique balance of local ; regional and national retailers”
    deal with local merchants as federal realty deals with large national chains with huge leverage ?

    the local merchants leaving provide another answer.

    the growth of stonefield will provide another answer.

  • LandlordWhisperer

    This is NOT unusual – retail tenants CHANGE unless they OWN their own building…Mom and Pop stores were in DOWNTOWN on Main Street 40 years ago and now they are GONE and their names still appear on the buildings….this is SELECTION of the FITTEST and MOST SUCCESSFUL….LARGE chain stores can spread poor retail sales over MANY locations – Mom & Pop stores can not

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