Mar 2, 2008

Retailer has to shift gearsBy Doris HajewskiJSOnline.com

Greendale – After more than a decade of playing in the big leagues of mall retail, Craig Runkel is trying to stay in business by becoming a little guy.

Runkel owns Runkel Bros. American Garage, a small shop at Southridge Mall, where he sells products that appeal to auto buffs and NASCAR enthusiasts: clothing, wall signs, die-cast cars and logo accessories.

He has a “going out of business” sign on the storefront, but he hopes to stay if he can persuade the mall to reduce his rent – which he says is now about $12,000 a month – to an amount that he can afford to pay. In effect, he wants to go from paying the full cost of a 10-year lease deal to a the same low-cost rent that temporary tenants pay.

He’s behind on his rent, and there are three years left on his lease. Without that rent reduction, he’ll likely close his shop by the end of March.

In the world of mall real estate, it would be a shift down from the big leagues of national retailers, who typically pay higher rates for 10-year leases. He’d enter the cheaper but uncertain world of small local operators on temporary leases. Malls make such deals with small businesses when they can’t find national tenants to fill their space at higher rates.

The rent for temporary tenants is cheaper, and terms are short. In exchange for the lower rent, the mall has the right to end such leases and push out the temporary tenant if a better prospect comes along.

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