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Abandoned Bon-Tons might be ripe for other industries

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PHOTO/CHRISTOPHER HOLLAND
The Bon-Ton at the Westgate Mall in Bethlehem. There are plenty of options for the space when the store closes.
PHOTO/CHRISTOPHER HOLLAND The Bon-Ton at the Westgate Mall in Bethlehem. There are plenty of options for the space when the store closes.

As the Greater Lehigh Valley says goodbye to Bon-Ton, the York-headquartered department store chain with 230 properties in 23 states, many are wondering what will replace those stores.

Can landlords find other large retailers to fill the space, or will you find yourself working out or even living where you used to buy your linens? Turns out that these spaces could end up hosting supermarkets, gyms, apartments, restaurants and other entertainment venues as owners of malls, in particular, get creative to transform the dynamic of their offerings.

In the Greater Lehigh Valley, seven Bon-Ton stores are being liquidated or already are shuttered: in Allentown, Bethlehem, Palmer Township, Doylestown, Richland Township, Stroud Township and Wyomissing.

The chain’s footprint in the region comes from former Hess’s Department Store locations that Bon-Ton took over in the early 1990s when that department store chain went out of business.

But now it’s Bon-Ton that’s going out of business, and in the midst of what some have called a “retail apocalypse” with stores from Sears to Toys R Us closing across the nation, it’s easy to wonder what could possibly replace the Bon-Ton stores – many of which are more than 100,000 square feet of retail space.

BETTER THAN IT LOOKS

The picture isn’t as bleak as it might appear, said Andy Graiser, co-president of A&G Realty Group, the New York firm hired to sell the company-owned or leased real estate assets of Bon-Ton.

“Good real estate is still good real estate,” he said.

He explained that even if department stores aren’t doing well, they’re still generally located in areas with a high density population center nearby and with good access to area highways, which make the spaces still valuable.

In fact, Graiser said his firm has had far better luck in filling former Bon-Ton spaces than the company expected.

He said the portfolio is a mix of company-owned stores and leases. The properties, if offered at the proper price, have been attracting buyers. (None of the company-owned properties are in this area.)

SUPERMARKET

A&G has had some interest in businesses seeking to buy leases if the location is right and the lease is low. None of those are local either, however.

Graiser noted that one former Bon-Ton in this region has already found a new tenant.

Last week, CBL Properties, a real estate investment trust based in Tennessee, said a new 87,000-square-foot ShopRite supermarket would go into the former Bon-Ton space at Stroud Mall in Stroud Township.

Graiser said supermarkets, furniture stores and gyms are popular contenders for filling vacant retail spaces similar to those Bon-Ton is leaving behind. That’s a bit of concern for Rachel Berosh, assistant manager of the South Mall in Allentown, where a Bon-Ton store is vacating.

“We already have a gym and a furniture store,” she said.

ECLECTIC MIX

But while those types of popular replacements may not be in the cards to replace the South Mall Bon-Ton, Berosh said the mall is getting an interesting mix of businesses joining the mall in the coming months – which she thinks will attract a complementary business for the space.

She noted that a new toy store is opening – capitalizing on the void left behind by the Toys R Us closure.

Also, a microbrewery is opening in two vacant spaces inside the mall, which should attract a new and different crowd than the South Mall normally sees.

GOOD BUT DIFFERENT

While the future might not be bleak, Graiser said the future of that retail space is going to be far different from what the public is used to seeing.

“It’s amazing how creative these developers are getting,” he said.

As large department stores fall out of favor with the shopping public, he said the real estate industry is looking at innovative ways to fill retail space left behind by stores like Bon-Ton.

“You’re targeting everybody,” Graiser said. “You don’t want to leave a stone unturned. You want every economic opportunity.”

SUBDIVIDING

Sometimes it’s just a simple adjustment, such as dividing the space into smaller stores to rent to more-targeted retailers with more efficient uses of space.

Clothing discounters and similar retailers have been seeking out bargains on such retail space, he said. Offices and co-working spaces also find homes in such locations.

But sometimes the businesses that replace former department stores, like Bon-Ton, are much different animals.

“The concept of ‘live, work, play,’ is very important,” Graiser said.

With that in mind, many retail spaces are filling former retail space with a mix of retail, entertainment, food and residential components, he said.

SHOP AND STAY

In one interesting project, Simon Property Group, which runs the Lehigh Valley Mall in Whitehall Township, is adding hotel rooms to vacant mall space in other parts of the country, targeting business travelers who want to have everything they need within easy walking distance.

This spring, Simon Property Group and Marriott International announced a plan to open at least five new hotels at Simon shopping centers over the next several years. 

“Simon’s centers provide leisure and business travelers alike access to shopping, restaurants, entertainment and an array of unique experiences outside their door, said Eric Jacobs, chief development officer, for Marriott International.

APARTMENTS

But former retail store spaces, such as Bon-Tons, might not just offer weary travelers a place to lay their head for a night.

Other projects already are putting residential rental units in former department store and mall spaces.

So, if you practically lived at the mall when you were a teenager, now you can live there in a full-fledged apartment. And, it will be an apartment where you can find your shopping, fitness and entertainment right outside your door.

One example is the Brea Mall in Brea, Calif., where Simon will add mixed uses, including a new three-story, 120,000-square-foot Life Time Athletic healthy living, healthy aging, healthy entertainment destination as well as residential, entertainment, restaurants and new retail brands.

DEMAND IS HERE

Graiser said residential rentals might be a good fit for some of the former Bon-Ton stores in the region because of the tight housing market and demand for apartments.

He noted the industrial market in eastern Pennsylvania is booming and industrial developers can’t build light-manufacturing, logistics and warehousing sites fast enough.

That means the job market is also tight, and companies locating to the region may be recruiting people from outside the area to work here. They have to live somewhere, and rentals generally are the first place they will look.

So the volume of vacancies in the retail sector created by closings like the Bon-Ton’s may just be the answer to other industries’ needs.

Whether they are replaced by discounters, fitness centers or apartment units, it’s too early to say, but Graiser said he’s confident they will be filled.

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