Nov. 2--In the middle of 2003, the Lafayette Albertsons grocery store expanded and opened in larger digs at the Waneka Marketplace.

The 57,000-square-foot grocer anchored the brand-new shopping center -- bringing with it the honor of being the second-largest contributor of sales tax in the city -- and handfuls of proprietors such as John Mathews were willing to pay the higher rents that came along with neighboring an anchor.

A grocery anchor, in particular, attracts people more consistently, so that was a huge draw for Mathews to help open South Boulder Road Liquor to the immediate east of the Albertsons at 555 South Boulder Road.

But recently, the consistency waned and the traffic grew more sporadic when it was one of two Boulder County stores that the Boise, Idaho-based Albertsons LLC decided to close last week because of what company officials classified as poor performance. The other Boulder County location on the chopping block was located at 1750 Main St. at the Westview Plaza in Longmont.

As a result, more than 140 people lost their jobs and more than 112,000 square feet of space is now empty, leaving some neighboring businesses and municipalities in states of uncertainty.

"We're hearing rumors," about Albertsons being filled by another tenant, Mathews said. "And you know how rumors are.

"I just hope they're true."

The empty anchor issue is not unfamiliar to Boulder-area shopping destinations as some malls and centers have been negatively impacted by changing retail dynamics -- notably large retailers trimming their store base or succumbing to bankruptcy. However, the recession and a weak retail environment create twists for the Waneka Marketplace, Westview Plaza and other regional centers with dark anchors, some say.

"It's the old Catch 22," said Mark Rosneck, owner of the EmbroidMe custom embroidery shop in the Westview Plaza. "Somebody has to be looking for a space in North Longmont. ... But there's an

awful lot of big spaces around throughout the city."

A 'shocking' loss

Despite the neighborhood grocery closing, Rosneck said he is quite hopeful for the success of his business. The 1-year-old shop is a destination retailer, he said, adding that his business is buoyed by the workers and tradespeople that frequent the nearby Chipotle and Five Guys Burgers and Fries.

"They're actually looking for ways of differentiating their small businesses," through EmbroidMe's offerings including promotional products, screen printing and personalized gifts, Rosneck said.

A few doors up at Westview Liquors, co-owner Kim Bui said she was "shocked" about Albertsons closing.

Bui estimated her 6-year-old

store might take a 20 percent to 25 percent hit in foot-traffic because of the Albertsons departure. However, she said she remains optimistic because of her business' longevity, the continued support from its regulars and its locale on U.S. 287.

Nearly 60,000 square feet of contiguous space could be hard to fill even in a healthy economy, so the vacancy is complicated given the recession, said Brad Power, director of economic development for the city of Longmont. The space, he speculated, could end up being carved into smaller-sized spaces.

"The pace at which retailers are developing new locations has slowed down everywhere; we're not immune to that," he said. "The (Westview Plaza) is pretty strong otherwise."

Power cautioned that there could be a lot of work left in the commercial real estate and retail sector, which were not only negatively hit by consumers and businesses pulling back on spending, but also the credit crunch and subsequent crisis.

"This community, though, has really set the stage for trying to be a proactive as possible," Power said.

Albertsons' closure will impact the Westview center and people's shopping patterns, Power said. However, he noted, the grocery dollars should remain in the city and could be bolstered by the potential arrival of natural groceries including Sunflower Farmers Market and Sprouts Farmers Market that are eyeing locations off Hover Road and at the Twin Peaks Mall, respectively.

The city of Lafayette estimated it could lose as much as $450,000 in tax revenue next year if former Albertsons patrons do their shopping outside the city, officials told the Camera in September.

Since the time Albertsons announced it was closing a handful of Colorado locations, city officials have worked as a "matchmaker" for the site, meeting with a developer to take the property over and buy it with a replacement grocery store tenant in mind, said Gary Klaphake, city administrator.

"At first it was a hard pill to swallow," Klaphake said, "and in the end, a head start might have been just what we asked for."

Troubled waters

During the third quarter, the vacancy rate for neighborhood and community centers increased in 50 of 76 major metropolitan areas, Ryan Severino, an economist for real estate research firm Reis Inc., wrote in an Oct. 15 report.

Rents, he added, fell in 73 of those 76 markets.

"The deterioration of fundamentals for neighborhood and community centers continued during the third quarter of 2009, but at a slower pace than ... observed in the first half of the year," Severino wrote.

Vacancies at neighborhood and community shopping centers increased to 10.3 percent, a 17-year high, during the third quarter, Reis officials said. Vacancy rates at regional and super-regional malls climbed to 8.6 percent, up from 6.6 percent during the comparable quarter a year before, Reis said.

During the past year, a number of large and anchor-worthy retailers including Macy's, JCPenney and Sears have closed hundreds of stores and others, including Circuit City, Mervyns and Linens 'N Things went bankrupt.

While the vacancy data reflects the high number of store closings this year, the economy also is forcing healthier retailers to rethink their strategies, Severino said.

"Retailers that would have otherwise expanded to capitalize on the depressed environment are delaying expansion plans until after the holiday season, hoping to obtain even more attractive lease terms from battered landlords," he said. "This will only prolong the weak fundamentals in the retail market."

For that reason, local developer Jim Loftus doesn't expect to fill the 30,000-square-foot space left vacant at 2600 Pearl St. when electronics retailer Circuit City shuttered its store base until possibly next year.

"When Circuit City went bankrupt in March, if you don't have a tenant almost immediately, then you're really looking a year down the road," Loftus said. "Most people have their spaces picked by May or June."

The former Circuit City space accounts for 78 percent of the 28th and Pearl streets shopping center, but Loftus said he is not concerned about the neighboring retailers. The retailers operating in the smaller spaces remain healthy and that he has letters of intent for vacancies in those spaces -- left by Busy Body home equipment store that closed and another soon to be vacated by a Noodles & Company restaurant, which is moving to Twenty Ninth Street.

Reis officials project increasing vacancy levels and negative effects on rent for neighborhood and community centers through 2011.

"We have yet to observe any unexpected systematic resumption in hiring and strength in consumer spending that might lead us to revise our projections with a more optimistic bent," Severino said.

Different approaches

The economic climate hasn't helped mall operators filling the 40,000-square-foot southern anchor space that has been vacant for the entire three-year operating history of Boulder's Twenty Ninth Street shopping center.

The space originally was targeted to be a flagship store for Wild Oats Markets Inc., which was acquired by Whole Foods Market Inc. in 2007. The space not only sat empty during the grocer's subsequent legal battle with the Federal Trade Commission, which filed an anti-competitive complaint over the merger, but the site also was subject to a lawsuit between Macerich and Whole Foods, which wanted to sublease the space to Sports Authority.

Macerich officials said the space was intended for a grocery store.

The two sides eventually reached an agreement and Macerich regained control of the space in 2008.

However, the space has remained vacant since.

Mall officials said they've envisioned finding a retailer to fill the entire space, but have yet to land a tenant because of the economic state, said Heather Drake, senior marketing manager for Twenty Ninth Street and Broomfield's FlatIron Crossing, another mall operated by Macerich.

In the meantime, the mall has taken steps to make some use of the space for a seasonal Halloween costume store and for other uses such as a business trade fair hosted by the Boulder Chamber on Nov. 18.

"We don't mind waiting a little bit to get the right tenant," Drake said.

The philosophy seems to have worked down the highway at FlatIron Crossing, she added.

FlatIron Crossing's southern anchor was vacant for more than three years, after clothier Lord & Taylor closed in 2005.

When Lord & Taylor closed, some initial discussions focused on filling the 80,000-square-foot space with anything from a mix of shops to a destination hotel.

What resulted was the former, and by this month's Black Friday, all of the 120,000 square feet should be filled.

FlatIron reached agreements with women's apparel store XXI Forever, organizational products retailer the Container Store and Ultimate Electronics to fill the anchor.

"The strategy with multi-tenanting the building was to bring some bigger brands to the center that would reach more of an expansive market and target a different market as well," Drake said.

The strategy appears to be working, she added. The arrival of XXI Forever and the Container store appears to have resulted in more shoppers, and the expectation is for that to increase when Ultimate Electronics opens its doors on Nov. 27, she said.

"It's been really nice to see more traffic," she said.

Contact Camera Business Writer Alicia Wallace at 303-473-1332 or wallacea@dailycamera.com.

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