Freehold Raceway Mall has emerged as the Shore’s leading mall, holding off a challenge by online shopping.
FREEHOLD TOWNSHIP — Nino Zangari was scouting locations to open his first virtual reality and gaming store, Saber VR, when he found out Brookstone had closed at the Freehold Raceway Mall.
An entertainment center could seem out of place wedged between David’s Tea and Build-A-Bear Workshop. But the mall’s management welcomed it, Zangari said.
“They were great to us to give us a shot,” Zangari, 28, said.
The Freehold Raceway Mall appears to be fending off a challenge from the internet that has forced retailers elsewhere to retreat and its biggest competitors to nearly start from scratch.
It has been aided by an affluent customer base. But it also has won credit for an investment a decade ago that is paying off. As a result, the bricks-and-mortar stores that are expanding are choosing to set up shop in Freehold, experts said. See what the mall looks like in the video above.
“They made changes and were ahead of the curve,” said Steven Winters, vice president of retail based in East Brunswick for CBRE, a real estate company.
Freehold Raceway Mall, is approaching 30 years old.
Built in 1990 by the owners of Freehold Raceway on the opposite side of Route 9, it has nearly 1.7 million square feet of space, making it New Jersey’s second biggest mall. Only Westfield Garden State Plaza in Paramus is bigger.
The Macerich Co. bought the Freehold mall in 2005 and now operates it in a joint venture with the real estate firm Heitman.
The mall is attracting shoppers like Dan and Diane Raisch of Toms River, who recently visited L.L. Bean, a retailer that established itself with a famous catalog and now is swimming against the grain. It has opened 26 stores since 2008.
“This was an opportunity to come and do shopping for something specific you saw in the catalog and wanted to check out in person,” Dan Raisch, 70, said. “Or it could be, you’re here in the mall and you wanted to swing by and see if they had anything new.”
Malls face a tough slog. The digital age is cutting into their business, and the outlook is grim. Online sales are expected to increase from 17 percent to 35 percent in the next decade, and as many as a quarter of U.S. malls could close in the next five years, according to a report by Credit Suisse.
It is taking a toll on New Jersey. The number of retail establishments has declined by 10 percent since its peak in 2008, according to the U.S. Bureau of Labor Statistics, and other malls are scrambling to survive.
The owners of the Monmouth Mall in Eatontown have proposed turning the shopping center into a mix of retail, commercial and apartments. The owner of Ocean County Mall in Toms River has said it is working on a “transformational redevelopment.”
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The Freehold mall, however, had a vacancy rate of 3 percent, at the end of last year, according to Macerich, far better than the national average. The vacancy rate in regional malls was 8.4 percent in the first quarter of 2018, according to Reis, a research firm.
How has Freehold stayed afloat?
Freehold Raceway Mall was built to serve the population growth in Western Monmouth and Ocean counties and Mercer County. And it has turned into a relatively affluent area.
New Jersey’s median household income is $73,702. By comparison, Freehold Township’s median household income is $99,353; Marlboro’s is $140,403, and Colts Neck’s is $162,083, according to the U.S. Census Bureau.
It has helped the mall survive an era of widening income disparity that has left middle-class consumers — and the malls that cater to them — squeezed.
Their paychecks have been stagnant. Their housing, education and health care costs have been rising. And they have been left with less discretionary income, a report by New York Life Real Estate Investors found.
“Income and its corresponding spending power have shifted away from the shrinking middle income and growing lower income brackets in favor of a smaller upper income segment,” the report said.
2. Reinventing the wheel
Freehold Raceway Mall expanded in 2007, turning to sit-down restaurants like The Cheesecake Factory and PF Chang’s China Bistro.
It called the project a “lifestyle center,” built to resemble a Main Street. Customers enter the restaurants from the outside and don’t have to go into the mall first.
More recently, it has added new amenities like foosball tables and touch-screen directories.
“The entire mall is becoming experiential,” Winters from CBRE said. “Not just stores.”
It was enough to attract millennial-friendly spots like Planet of the Crepes, a creperie that settled on Freehold Raceway Mall for its second store.
“I know malls are going through a rough patch, but…before I even knew that information, we decided that would be our business model,” its owner, Mihran Sirekan, 28, of Old Bridge, said. “There are some malls that are more resilient than others, this being one of them.”
3. Finger on the pulse
Not all of the stores that opened during Freehold’s expansion from a decade ago survived. Coldwater Creek, Ann Taylor and Borders Books and Music have closed.
So have other retailers like Banana Republic, J. Crew, and the Gap, which once were dependable mall tenants.
But they have been replaced in Freehold by a new crop of retailers that analysts say offer something more in line with what consumers are looking for — fun experiences and fresh, affordable merchandise.
Among them: Primark, Zara and H&M.
“There’s a vast difference in terms of the (stores’) pricing structure,” said Michael Londrigan, vice president of academic affairs at LIM College in New York.
It’s a blueprint that has kept the mall viable — and one that Saber VR is banking on.
The idea: Virtual reality games are too expensive for most consumers to own. So it will offer the chance to play with prices ranging from $1 a minute for 15 minutes to 75 cents a minute for an hour. Customers also can buy memberships for $50 a month.
When it came down to finding a location, Zangari chose the Freehold mall.
“Foot traffic is great,” he said. “That’s pretty much it.”
Michael L. Diamond; @mdiamondapp; 732-643-4038; firstname.lastname@example.org
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