ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, June 26, 1996 TAG: 9606260021
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
DATELINE: DALE CITY
SOURCE: Associated Press
ONE OF THE NATION'S largest outlet malls, once touted as a "safe bet" for retailers, now threatens the existence of several nearby Virginia businesses.
The fast-growing shopping mecca at Potomac Mills Mall may have grown too fast for some retailers' good.
The mall - one of the nation's largest - is ringed by big, vacant stores that had hoped to cash in on the mall traffic.
In the past decade, Potomac Mills gained a reputation for being as close to a sure bet as a retailer could get.
Many national chains that set their sights on the Washington area, such as Wal-Mart, Home Depot and Incredible Universe, went to the Potomac Mills area first.
The huge discount mall in Prince William County, which opened in 1985, also has become Virginia's most popular destination for out-of-state visitors. Strip malls, restaurants and other enterprises proliferated around the mall's edges.
Stores inside the center generally perform well; but for those in the outlying shopping centers, it's not so safe a bet, retailers and analysts said.
The most notable failure among tenants of these perimeter malls was Incredible Universe. The electronics megastore closed abruptly in May, just seven months after opening. Other vacant storefronts include a Total Beverage beer and wine store that closed recently after about a year in operation and a Best Products store that never opened.
``That's the American way. You're going to have some fallout,'' said David Clarke, director of Virginia real estate for the Rite Aid Corp. drugstore chain, which recently closed its only store near Potomac Mills.
The area remains a prime real estate market, with expensive rents and a dwindling amount of developable land around the mall.
But real estate and retail analysts said the region is overbuilt, with too many stores selling the same kinds of merchandise.
``I'm not hearing any of my retailers rave about their Potomac Mills stores," said Kenneth Gassman, a retail analyst with Davenport & Co. in Richmond.
``They went in thinking it was going to be a slam-dunk success, and I think they found quite to the contrary,'' Gassman said. ``These locations are certainly more competitive and maybe less productive than some of their other markets.''
Although precise retail sales figures or vacancy rates are not available for the Potomac Mills area distinct from the rest of the county, other statistics paint a picture of a market that has too much retail space for the number of people likely to shop there.
In particular, many stores near the mall that intended to draw tourists on shopping sprees now find themselves catering primarily to a local market not large enough to support all the stores there.
Potomac Mills draws about 17 million visitors a year, by its own count. Many come in tour buses, and the shoppers generally do not venture beyond the enclosed mall.
The five-mile radius around Potomac Mills has a population of about 150,000. According to the National Research Bureau, a shopping center industry research firm in Fairfax County, the same area has about 6.8 million square feet of retail space.
Excluding the mall itself, that means there are 34 square feet of retail space per person, compared with a national average of about 19 feet per person.
Potomac Mills is like many shopping centers nationwide that are victims of their own success, said Jay Donegan of the retail leasing and development firm J. Donegan Co. of Vienna.
``I think Potomac Mills has been overbuilt for years, and my feeling is it will remain overbuilt for the foreseeable future,'' Donegan said.
To weather the inevitable shakeout at the shopping center, the county is trying to attract high-tech employers and other means of economic development away from the mall.
``The Potomac Mills area has been an incredible economic engine. I think it's likely that it will stabilize,'' said Deputy County Executive Lawrence Hughes. ``In any given region, only so much retail is going to be supported.''
LENGTH: Medium: 88 lines ILLUSTRATION: PHOTO: AP Potomac Mills, an outlet mall in Dale City, drawsby CNBabout 17 million visitors a year, by its own count, but many come in
tour buses and generally do not venture beyond the mall.