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Rehab gives Utah center new lease on life

By Berry Craig

It is a story of faith, a face-lift and a fashion anchor. It has a happy ending, too. Just a few years ago, critics predicted doom for Newgate Mall in Ogden, Utah, population about 100,000. Occupancy was down to 50%; many customers had found greener shopping pastures at nearby Ogden City Mall and Layton Hills Mall.

In 1982, (near left) Newgate Mall struggled in the face of competition from nearby centers. Today, (left) after a face-lift, the center is back on its feet.

"We always felt we could turn it around," said Brent Parkin, Newgate's general manager. "We have. But I'm not saying, 'I told you so' to our critics. I want to keep things positive. Besides, we're just grateful the way things turned out for us."

Parkin lets numbers do his bragging. At press time, Newgate's occupancy was 85%; it is projected that occupancy will top 90% this year. Total mall sales volume is up 46% over 1997 and 160% from 1993, "the year our big turnaround started," Parkin said. "Customer traffic has increased by 15% from 1997 and by about 125% from 1993."

Newgate's comeback began in 1993 when the mall's previous owner and builder, Homart Development Co., a Sears, Roebuck and Co. subsidiary, provided a $1.5 million face-lift, he said. The mall's 12-year-old wood parquet floor gave way to quarry tile with marble accents.

"They also redid the interior lighting, added columns and other decorative features and put in new amenities and landscape plants," Parkin said.

Outside, the mall got a new paint job. "We went from a dark brown to a light tan," he added

Times got better in 1994 when Newgate beat out its two nearby mall rivals and landed Utah's first Dillard's. The Little Rock, Ark.-based department store chain was looking to expand into the Beehive State.

"Competition was tough," Parkin said. "But Dillard's went with us because they thought our potential for growth was greater and because the site we had to build on was in front of our mall. Dillard's wanted a location that was highly visible from the road."

Since then, Parkin says, Newgate has become "the premier destination for retailers looking to expand into Ogden. It has been great to bring in national retailers, giving local residents a better shopping experience and helping keep local sales tax dollars in Ogden to support our community."

The picture wasn't always so rosy. In 1981, Homart opened Newgate as a regional mall with almost 700,000 square feet of gross leasable area (GLA). Sears and Mervyn's were anchors.

But there was stiff competition close by. "Ogden City Mall, a regional mall with five anchors and a GLA of 850,000 square feet had opened the year before we did," Parkin said. "Their occupancy was already 90%."

Just 10 miles away, too, was Layton Hills Mall, a three-anchor, 750,000-square-foot regional mall that opened in 1981. Its occupancy was also about 90%, according to Parkin.

"Both of these malls were attracting about all of the national tenants in the 1980s," he said.

Newcomer Newgate opened with 17% occupancy and struggled along in Ogden. A historic railroad town, Ogden is home to Hill Air Force Base, the largest employer in Utah. "The base definitely helps us," Parkin said. "But we target shoppers in their 20s to 50s and with moderate to high incomes."

After seven years in business, occupancy hit 60% at Newgate, then a high for the mall. But most tenants were local firms. Many didn't stay open for long. As a result, occupancy sagged to 50%.

"They didn't have a lot of up-front capital to properly merchandise or build out and display their stores," Parkin said. "A lot of them left after six months or a year."

"I took over this location in 1986, when the water slide was still here and lots of the mall was boarded up. Although the mall was only about 40% occupied at the time, I saw the potential for growth in the area, and felt that Newgate Mall would be the preferred mall in the community -- eventually," recalled Ken Cassar, president of locally based Cassar Jewelers. The chain has locations in both Newgate and Layton Hills Malls.

Anchor woes

In 1992, discount drug superstore chain Phar-Mor became the third anchor at Newgate. But six months later, it, too, was gone. The Youngstown, Ohio-based chain closed more than 200 stores and the company plunged into bankruptcy following the discovery of a massive embezzlement scheme said to have been masterminded by Michael I. Monus, Phar-Mor president and co-founder. In 1995, Monus was convicted of fraud and the company emerged from Chapter 11. Avatex Corp. now owns a 38% stake in Phar-Mor, which operates approximately 100 stores, mostly in the Northeast.

Homart figured the key to Newgate's prosperity was the right anchor store. "We definitely needed a fashion anchor," Parkin said. "Dillard's was the turning point for us."

Before Dillard's built its 120,000-square-foot store in Newgate, Homart was considering what amounted to a "if you can't beat 'em, join 'em" strategy for its Ogden mall.

"With Wal-Mart, Kmart and other discounters and off-price retailers close by, we had been considering going to an off-price center," Parkin said. "Dillard's kept us a regional mall."

Homart was counting on Dillard's to attract other national tenants. "That's what happened," Parkin said.

Tinseltown USA, a 14-screen cinema, opened earlier this year at Newgate Mall.

But in 1995, Sears sold Homart to Chicago-based General Growth Properties, the nation's second largest mall owner-manager-developer firm. General Growth has ownership in, or management responsibilities for, 127 regional shopping malls in 39 states.

General Growth kept the faith at Newgate, Parkin said. "They strongly believed that the area around the mall would continue to grow as the retail center for this region. National big-box retailers like Wal-Mart and Kmart were building down the street."

General Growth started remerchandising at Newgate in 1995, following a pattern familiar to most redevelopments. "We switched from more local to more national tenants," Parkin said. "National tenants brought us more stability."

But while the mall got ready for new tenants, occupancy dropped to 25%.

"We knew it was temporary, but the community and the shopper were leery about what was going on with all the old stores closed. We knew new stores were coming, but we couldn't announce it until the leases were finalized," Parkin said.

New tenants started moving in, many of them links in national retail chains like Victoria's Secret, Eddie Bauer, The Limited, Express, Bath & Body Works, County Seat, Famous Footwear, B. Dalton and Camelot Music. By the end of 1995, occupancy was back up to 40% and climbing.

In 1996, Oshman's Supersports USA took over the 65,000-square-foot Phar-Mor building. By year-end, Newgate occupancy had reached 53%.

"Several local tenants began building out new locations, too," Parkin said.

Eighteen more retailers went into business at Newgate in 1997, representing almost 120,000 square feet of leasable space. Cinemark started building Tinseltown USA, a 65,000-square-foot, in-mall, 14-screen cinema.

When it opened earlier this year, Tinseltown was Utah's largest movie house.

"There is now a 16-screen theater in Salt Lake City, 45 miles away," Parkin said. "But ours is still the largest theater north of Salt Lake."

With the addition of the theater and new stores, occupancy at Newgate Mall topped 85% this year. Parkin expects at least eight more retailers to open at the mall in 1999. "We expect occupancy to surpass 90% then," Parkin said.

"The changes at Newgate have been phenomenal," said Ken Dow, who opened the Ski Mania store at the center in 1987. "I can remember counting over 60 stores that had come and gone since I'd opened shop. Despite that, I still thought Newgate Mall was the best place for me to be."

In fact, Dow opened a second store at the mall, North Shore, in 1989.

"At one time, Ogden City Mall was interested in having me as a tenant. I was never interested in another mall. I always knew Newgate Mall would come around. It's been a great experience for me."

Jeweler Cassar said the mall's management team "is doing an incredible job. We're running out of space for new stores and the mall is full of people. I'm seeing double-digit increases over just last year. It's great."

But the manager is still not telling anybody 'I told you so,' tempting as it might be.

"We have experienced an incredible rebound. Critics said it would never happen, that Newgate would never succeed. But we never lost hope. [The] Homart and the General Growth team wisely invested in the mall. Dillard's started the ball rolling again. Now we believe we are geared for success as we enter the new millennium. We have 75 stores open now. We expect to have about 90 stores open by the end of the year 2000 and we would be almost completely full then."