honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser

Posted on: Wednesday, October 27, 2004

Short leases benefit all

By Catherine E. Toth
Advertiser Staff Writer

When she found out her lease in Mo'ili'ili was about to expire, Deborah Sharkey panicked.

Jan Furuta looks at a breastfeeding pillow at Makana Mother & Baby, a business that is renting space at Ward Centre through the holidays. The store used to be in Mo'ili'ili but its lease there ran out.

Eugene Tanner • The Honolulu Advertiser

Then she made a business decision that would take her maternity store, Makana Mother & Baby, to the next level: She decided to rent retail space at Ward Centre for the holidays.

"We have more traffic, better parking, better visibility," Sharkey said. "But at the same time, with malls, there are so many more demands such as increased hours, labor costs and rent. But we wanted to test the waters but not make a commitment for three to five years."

Such short-term leases provide an opportunity for small businesses that are interested in expanding, but are not ready to make a huge financial commitment. Most leases run three months starting in October and through Christmas, which is typically the busiest time of the year for retailers.

Sharkey's store had been at University Square in Mo'ili'ili, open just two days a week. Now at Ward Centre, near Borders Books Music & Cafe, the store has to be open during mall hours. That forced her to hire two part-time salespeople and expand her inventory by 30 percent.

It was the next logical step to expand her business, she said.

And leasing vacant retail space for the holidays also benefits mall owners, who fill unused space while offering customers new products and services during high-traffic months.

"While we make use of some of the vacant space, it also gives merchants the opportunity to test the market," said Jonathan Kim, general manager of Windward Mall. "And, foremost, we're providing customers something different to shop for at Christmas."

The cost for such short-term rentals is typically negotiated, Kim said, and can vary by location and floor space.

Sharkey's rent is "substantially" higher at Ward Centre than at University Square. But she considers the higher cost an investment.

"At this stage in the business, after three years, it was time to try something like this," said Sharkey, a mother of two who also runs her own communications company. "In general, we've been very pleased. Customers have been very happy that we're in a better location and it's more convenient for them."

This holiday season at least four temporary stores will be open at Windward Mall, including Between Worlds, which sells merchandise from South America, and Islands in the Sun, which sells products from Indonesia. In addition, Waldenbooks will open smaller stores that sell bargain books, calendars and manga (Japanese comics).

At Ala Moana Center, about nine stores will be open in vacant retail space on a short-term basis for the holidays, said Linda Gabriel, development representative for General Growth Properties Inc., which owns Ala Moana Center and Victoria Ward Centers.

Several stores have already opened at the state's largest mall, including Pier 24 Imports, 'Ukulele House and Boutique Sharon. Some permanent merchants at Ala Moana Center, such as Martin & MacArthur, started as temporary retailers.

"For the most part it's difficult to become a permanent tenant here," Gabriel said. "Being on a temporary basis provides us the opportunity to see how the merchants will fit into the merchandise mix and gives merchants the opportunity to run their businesses at Ala Moana Center."

The number of holiday-only stores opening in shopping centers depends on the amount of space available. Kahala Mall and Pearlridge Center, for example, are both 100 percent leased by permanent tenants this year.

Windward Mall, on the other hand, is about 85 percent occupied. The mall has maintained between 82 and 85 percent occupancy over the past few years, Kim said.

Renting that space, Kim said, "naturally helps us, too."

Sharkey hopes her first experience operating her store in a mall will provide enough boost for her company that she can continue to grow.

But right now her only concern is where Makana Mother & Baby will be, come Jan. 15 when her lease at Ward Center will expire.

"It's a real issue for us," she said. "Things could change very quickly. I'm starting to panic about where we're going to be three weeks after Christmas."

Reach Catherine E. Toth at 535-8103 or ctoth@honoluluadvertiser.com.