It appears, according to a published news report in Friday’s Capital News by contributor Jason Luciw, that despite the continued spin from Orchard Park Mall administration, Kelowna’s venerable mall is suffering. Two anonymous store owner-managers, who declined to be identified as they’re trying desperately to renegotiate high lease rates because of the downturn in traffic in the six-month period without Wal-Mart as an anchor tenant, said their sales are down 20%.
This is despite the continued line from the Oxford Properties Inc., which manages the mall under contract for mall owner Primaris Real Estate Investment Trust, administrative team assigned to Orchard Park Mall who are consistently quoted as saying overall traffic through various mall entrances is up more than 5% year-over-year and that Wal-Mart didn’t matter anyway – since the Wal-Mart shopper is different than the high-end, fashion conscious shopper who typically frequents the mall.
That last part doesn’t wash with this armchair pundit. Wealthy people may look for high-end merchandise and enjoy shopping at boutique stores, true, but they’re also frugal and love a bargain. The fact is, they do shop at Wal-Mart (in addition to the mall). With Wal-Mart gone, they have less incentive to visit the mall as frequently and may only go during seasonal peak times (back to school rush at the end of August, Christmas, Valentine’s Day, and early spring).
The frequent rumour that Gap Inc. discount, trend-setting clothing retailer Old Navy is to move in to all, or part, of the old Wal-Mart store appears to be just that – a rumour. I don’t see Old Navy wanting into the mall unless the leasing personnel with Oxford are willing to (a) renegotiate the lease for its already-present Gap store on more favourable terms for the merchant and (b) entice Old Navy with a sweetheart lease deal. And, I don’t see Primaris giving the go ahead for Oxford to do that, given that they recently made their prized portfolio asset Orchard Park Mall highly leveraged, using it as collateral for a series of several hundred million dollar loans, private placements, and debt-financing related activities it secured to buy a bunch of prized strip malls across Canada. They want as much revenue as they can muster and don’t want to be giving away any “sweetheart deals.”
Lastly, I don’t see the empty shell that is the old Wal-Mart store being redeveloped for at least another year, sometime in the late spring or early summer of 2006.