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Malls could be left with gaping holes if the Fresno-based department store chain cannot find a buyer by March 24. Some with Gottschalks stores, like Sierra Vista Mall in Clovis and the Hanford Mall, are still trying to find tenants for anchor stores left vacant by the demise of Mervyns.
Because so few retailers are expanding, closure of Gottschalks stores could force landlords to be more aggressive in lease rates, terms and incentives -- and to look for unusual businesses to fill those big spaces, said Fresno real-estate broker Steve Rontell.
"There are so few tenants expanding because of the economy, this time around we may end up with too many boxes vacant and not enough tenants to fill them," said Rontell, vice president of Colliers Tingey International.
Potential replacements include Hispanic department stores, Hispanic grocery stores and Asian grocery stores, he said. And Clovis, he noted, "still needs a big sporting goods store."
Rontell said some large vacancies could be converted to theaters, private colleges, churches or even government offices. Fresno's Manchester Center already has government offices in a former department store space.
A U.S. Bankruptcy Court judge in Delaware on Thursday approved Gottschalks' $125 million "debtor in possession" loan from a group of creditors headed by GE Capital Corp., a credit plan intended to allow the retailer to continue operating for the next two months as it seeks a buyer.
Among a slew of "first day" motions approved Thursday by Judge Kevin Carey were orders for banks to continue to honor Gottschalks paychecks to its employees; to allow the company to honor customers' gift cards; and for utilities to continue to provide service to the company and its stores.
"These approvals will ensure that we are able to operate on a normalized basis" as the retailer explores options to find a buyer or prepare for liquidation, Gottschalks Chairman James Famalette said in a statement.
Mall managers said it's too early to say what they will do if Gottschalks cannot find a buyer and must close.
Gottschalks operates 58 department stores in six Western states, 38 of which are in California. Of those, six are in the company's home stomping grounds of Fresno, Kings and Tulare counties.
"Which stores they keep open and closed, that's going to be their decision," said Michael Johnson, vice president of property management for Macerich Corp., which owns Fresno's Fashion Fair and six other malls in which Gottschalks is a tenant. "There are a lot of retailers succeeding in this environment, and some aren't. ... But we feel we're well prepared."
In Soldotna, Alaska, Gottschalks' potential closure means more than just vacant space.
Soldotna Mayor Peter A. Micciche said Gottschalks is one of only two major stores where area residents can shop for clothes without heading out of town, and is a major source of sales tax revenue.
"For a town that depends almost entirely on sales taxes for our funding, I'd hate to see one of our major contributors in jeopardy," Micciche said. "And as mayor, I'm concerned about folks losing some work, too."
The reporter can be reached at tsheehan@fresnobee.com or (559) 441-6319.
To see more of The Fresno Bee, or to subscribe to the newspaper, go to http://www.fresnobee.com Copyright (c) 2009, The Fresno Bee, Calif. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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