Glenwood Mall doubles down on assertion that Ross lease was problematic
At a Glenwood Springs City Council meeting in December, West Glenwood Councilor Rick Voorhees stated, “I wish that there had been a modicum of common sense back whenever this contract was signed.” His comment came in regards to a lease agreement between the Glenwood Springs Mall and anchor tenant Ross Dress For Less.
At the time, Council was weighing a West Glenwood Springs Conditions Survey prepared earlier in the fall by Ricker Cunningham out of Littleton, and its recommendation to form an urban renewal authority to redevelop what the report concluded to be a “blighted” site.
According to that document, the lease agreement, dated June 10, 2011, extended “extraordinary control” to Ross, which subsequently made it “all-but impossible” for mall owner Frank Woods to “freely manage the mall properties.”
One question being raised now is why Woods agreed to the lease with Ross in the first place, especially if its use restrictions were excessively harsh.
“I think you have to look at the time period when the lease was signed, which was kind of the middle to end of the recession,” Janet Perlstein, attorney for the Glenwood Springs Mall, said Tuesday in reference to the Great Recession that gripped the national and local economy in late 2008 and in the ensuing years.
“Landlords were desperate for tenants, and so they did a lot of things to get people in thinking that in the long run everyone is working toward the same goal of having a viable, vibrant center with a lot of uses and drawing a lot of people,” she said in a phone interview.
According to the Conditions Survey, as of Nov. 13, 2018, the primary mall building had a vacancy rate of “approximately 90 percent.” The same survey noted that the citywide commercial vacancy rate, at the same time, was “approximately 3 percent.”
Perlstein explained that the lease agreement afforded to Ross was a big part of the reason for the Glenwood Springs Mall’s 90 percent vacancy rate, which she said has had a devastating effect on the facility’s foot traffic.
“I negotiated a Ross lease at Harvest Junction in Longmont, and if you were to compare the two side-by-side you would see that there is a huge difference,” Perlstein said, offering a comparison to the Glenwood Springs Mall situation.
“I would say that in my experience, and I have been doing this for 35 years, that this is one of the most tenant-friendly, least landlord-friendly, most-restrictive leases I have ever seen,” she said.
Perlstein did not negotiate the Ross lease with respect to the Glenwood Mall.
“There are a whole bunch of motivating factors that go into an analysis of why you would negotiate a lease in a particular way,” Perlstein said. “And, sometimes, you just get a tenant like Ross who says … we are the big guy on the block and do it our way or hit the highway, and we don’t care which way you want to go.”
Additionally, Payless ShoeSource recently announced it is closing its remaining 2,500 U.S. and Canadian stores, including the Glenwood location. Payless has remained one of the mall’s few stable tenants through the recent turmoil.
Perlstein additionally contended that Ross had not consented to previously proposed mall tenants, including Kohl’s, Sportsman’s Warehouse and Harbor Freight.
Ross’s legal representatives, however, have said otherwise, citing an April 4, 2018 letter of intent executed by Ross and Woods to, among other reasons, make space for new mall tenants.
“Keep in mind, letters of intent are non-binding,” Perlstein said. “It’s basically a statement of proposed issues – those that are identified in the letter – that will be incorporated into a document. But, until that final document is executed, there is no deal.”
Rather, Perlstein said she was “still waiting for it,” in regards to Ross’s consent for those proposed tenants, and that the chances of those deals still hanging around was pretty slim.