Voters in the the new city of Stonecrest, located near Stonecrest Mall and I-20, will elect their first government leaders during an election March 21. KENT D. JOHNSON / KDJOHNSON@AJC.COM
Photo: The Atlanta Journal-Constitution
Photo: The Atlanta Journal-Constitution

Woes around Stonecrest mirror mall struggles

Twelve years ago, the Mall at Stonecrest in southeast DeKalb County was riding a wave of retail store expansion and spawning growth.

The area around the mall boasted a new Buckhead Colorado Steakhouse, an 85-room Fairfield Inn and Suites and a development with 400 new Ryland homes.

The manager of the steakhouse at the time, Keith Hand, told The Atlanta Journal-Constitution: “The response has been incredible. We had no idea this market would be this great.”

The mood is not so joyous any more around Stonecrest, one of the last malls built in metro Atlanta.

Stonecrest has not only lost stores within its walls since those heady days, including Gap, Starbucks and Parisian, but big box retailers around its perimeter, including Best Buy and Target, also have closed.

Today, the half-built cinderblock shell of another unfinished hotel is one of the first buildings people see as they approach Stonecrest driving east on Interstate 20.

The woes around Stonecrest, which opened in 2001, reflect the struggles many retailers, and several metro Atlanta malls, face as the sector weathers changes in consumer habits and the disruption of the Internet.

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Once the center of the retail universe, malls are increasingly losing their influence as retailers retrench, stung by online shopping and consumers whose buying power has struggled to keep up with stagnant wages.

Ubiquitous department stores such as Macy’s, JCPenney and Sears have been closing locations at a rapid pace. A recent report by Green Street Advisors, a real estate analysis firm, suggested that won’t change soon. It said department store chains need to close around 800 stores nationwide if they want to return to pre-recession sales levels.

The belt-tightening has spilled over to stores that sometimes fed off mall traffic. Sports Authority is closing locations as part of its bankruptcy. Walmart said earlier this year it will close more than 150 U.S. stores. Kohl’s is shedding buildings, including the two-story department store space it filled at Stonecrest after Parisian folded.

“Big box retail arose in the ’90’s as so-called ‘category killers.’ Toys’R’ Us offered huge selection and discount prices,” said Ellen Dunham-Jones, a Georgia Tech professor who studies the mall industry. “However, today, the internet can almost always beat them on selection and price.”

For Stonecrest that could be a bad sign of things to come just as local residents push to make the area a city and gain control over attracting business.

Gwinnett Place Mall saw a similar flight of stores around its perimeter when the Mall of Georgia and Sugarloaf Mills were opening, they said.

And North DeKalb Mall never recovered after the drip of store relocations became a flood as its time as a destination waned, they said.

Emil Gullia, senior director at real estate firm Franklin Street, said the idled half-built hotel alone hurts Stonecrest.

“It tells me something about defeat rather than success,” he said.

Record sales, encouraging results

Donald Bieler, director of marketing at Stonecrest, said in an email that the mall had record sales in 2015 and that 2016 results so far were encouraging. The mall, he said, has plans to answer its challenges.

“We currently have nearly 80,000 square feet of new development under construction, which will result in a favorable small shops occupancy of over 90 percent by Christmas of 2016,” he said in the email. “The new developments include an 8,000-square-foot Victoria’s Secret, a 20,000-square foot-popular European apparel retailer, and a soon to be announced entertainment concept.”

As for the September closing of the Kohl’s store, Bieler said, “We are disappointed that Kohl’s has made this decision to leave, however, we always look at these situations with optimism. This opening allows us to search all types of retail and development in order to meet the needs of our customers.”

Urban Retail Properties has managed Stonecrest since 2014, Bieler said. In 2013, the mall’s loan was transferred to a workout firm after it encountered financial trouble caused in part by the Great Recession.

A mall’s woes may not be the reason outparcel retailers close, experts said. Lease renewals, the need to shed locations for struggling chains and changing demographics also play a role.

“Nothing is constant,” said Bob Wordes, a partner at The Shopping Center Group. “There’s always going to be change.”

Danielle Schumann, a spokeswoman for Best Buy, said the store at the Mall at Stonecrest relocated in March to Conyers to be more centrally located for east metro customers, which also includes Newton County. The new store, which opened in March 2002, is also smaller.

“From time to time, we review our real estate portfolio and evaluate various aspects, including the overall strength of a retail area, lease costs and customer traffic patterns,” Schumann said. “In this instance, we chose to relocate our store six miles down the road as we liked its retail mix.”

A big retail fish

Jon Neville, a partner at Arnall Golden Gregory and leader of the company’s retail team, said all is not lost for the Stonecrest area. If the mall could attract a big retail fish, such as an Ikea store or Whole Foods, it could create the kind of buzz that lures other retailers.

He points to the successful effort Gwinnett leaders made filling outparcels around Gwinnett Place with ethnic retail shops after the mall fell on hard times, including landing the MegaMart store. He said adding Costco to the line up and introducing sit-down restaurants at Cumberland Mall made it a destination popular enough to snag an Apple store.

And the Bass Pro Shop at Sugarloaf Mills, he said, lures consumers from all over metro Atlanta to make the trip out to Gwinnett County.

With the industry under so much pressure, Dunham said Stonecrest and others like it may in the end have to look at different uses for their malls. She pointed to The Echelon Mall in Voorhees, N.J. as an example. The owner demolished half of the mall, built a new outdoor Main Street and added housing on parking lots to both better connect it to the rest of the area, she said.

That was a recognition that the mall was more financially feasible being local-serving than regionally serving, she said.

“I believe Stonecrest was built on the expectations that the area would continue to grow, and with middle-class incomes that would support a regional mall,” Dunham-Jones said. “Across the country, we’re seeing later vintage malls similar to Stonecrest find that the areas haven’t grown as expected. This often means having to “rightsize” down to “neighborhood centers.’”

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