THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, December 31, 1995 TAG: 9512300444
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Long : 150 lines
Strings of plastic pennants flapped in the wind and banners outside the Riverside Discount Mall announced a ``Grand Opening.''
Inside, a handful of shoppers checked out a display of Dallas Cowboy jackets and FILA sweat shirts. Others browsed among the shelves of hair-care products, luggage and jewelry.
At the peak of the holiday shopping season, customer traffic was light inside the former supermarket on Campostella Road in Norfolk. But Chris K. Lee took the situation in stride.
``You stop by in March. It'll be different here,'' said Lee, a Korean-American businessman who has divided the store's 32,000 square feet into dozens of stalls for small merchants.
Almost two-thirds of the mall's space was empty. But by next spring, Lee said, the vacant areas will be occupied by retailers offering hardware, electronic appliances, furniture and groceries.
So far, Lee has signed up 27 merchants, and he is seeking 8 more.
``You drive by here, and there are no stores. Where are people going to go shopping?'' Lee asked, referring to a blighted stretch of Campostella Road south of the Eastern Branch of the Elizabeth River.
Dr. Milton A. Reid expressed the same measure of confidence in the mall's future.
``People will come here from all over Tidewater,'' said Reid, pastor of the Gideon's Riverside Fellowship Church in Norfolk.
Reid's church bought the former supermarket and an adjacent strip of stores in June 1994. The congregation, which uses two smaller stores for its church and social-services center, wanted to attract retailers who could meet the shopping needs of neighborhood residents.
The congregation figured it could apply rental income from this real estate investment to its community programs, Reid said. ``It's to our benefit to see that this mall succeeds,'' he said.
Whatever its difficulties in recent years, the neighborhood at the southern end of the Campostella bridge has had a rich retailing heritage.
The late Wendell P. Rosso began selling fruit there in 1939 and broadened the business during the 1940s to meats and produce. His partnership with the late Vincent J. Mastracco Sr. eventually became Giant Open Air Markets, a predecessor of the Farm Fresh supermarket chain.
The Rosso-Mastracco fruit and produce stand evolved into a grocery store with a restaurant and a bakery. By 1958, they had moved their store to a new building on the other side of Campostella Road.
When it opened, the store was the largest grocery store in the region, recalled Joe Wilder, a buyer at Farm Fresh who worked part-time at the first Open Air Market during the 1940s. With its restaurant, bakery and 24-hour service, the new Giant Open Air Market attracted a broad following.
``It was a long time before other supermarkets were open around the clock,'' said Wilder, who later became a manager for the Giant Open Air chain.
Although sales at the company's Campostella store remained strong throughout the 1960s, they began to falter in the 1970s.
By 1986, the Giant Open Air Markets chain had become part of the Farm Fresh chain, and some managers of the combined company questioned why sales at the Giant Open Air store on Campostella Road were declining when so much auto traffic passed that location.
The falloff was due partly to construction of a new bridge over the Eastern Branch of the Elizabeth River, which made entry into the store parking lot more complicated, said Mike Julian, chief executive officer of Norfolk-based Farm Fresh.
Shortly after arriving at the company in mid-1987, Julian visited the store to check on its problems.
``I drove across that bridge three times before I figured out how to get in there,'' he recalled.
Hurt by continued losses at that location, Farm Fresh decided in the late 1980s to close the store.
Construction of a turn lane on Campostella Road improved access to the store's parking lot, but the building remained vacant for several years.
Reid saw opportunity in the former supermarket and the adjacent string of stores.
If his congregation was going to buy the store, he would have to line up financing. But commercial bankers were not convinced that Reid and his 150-member congregation could bring their plans to fruition.
``I talked to the community reinvestment departments of at least three banks,'' Reid said. ``The bankers I talked to came over and looked the property and said they saw possibilities'' but would not lend the money for purchasing the stores.
Reid persisted in his search for a loan and found one in June 1994. The American Baptist Extension Corp. in King of Prussia, Pa., provided the congregation with a $700,000 loan to buy the strip shopping center.
The organization, an affiliate of the American Baptist Home Mission Society, provides financing to American Baptist congregations to build churches and to expand or repair existing church buildings.
In recent years, the American Baptist Extension has broadened its lending to church-related community projects, especially those in inner-city neighborhoods.
Helping Gideon's Riverside Fellowship Church buy a former supermarket ``is kind of an experiment for us,'' said J. David Follett, director of the extension's loan program.
In the past, the American Baptist Extension has lent money to congregations to buy stores that were converted to churches or church-related buildings. Its loan to Gideon's Riverside Fellowship was the first made for a commercial project, Follett said.
Why? The Baptist extension had been impressed by Gideon's involvement in community services, including its plans to develop 13 houses in Chesapeake for moderate-income families, he said.
The organization lent the congregation $700,000 at 8 1/2 percent interest for three years with options to extend the loan to 27 years. Last fall, it provided a second loan, for $300,000, for renovations to the former supermarket.
The extension's loans are secured by a deed of trust and an assignment of rents and leases to American Baptist Extension.
After lining up financing, Gideon's Riverside Fellowship had another hurdle: finding tenants for the empty 40,000 square-foot store. Reid approached a handful of grocery-store owners about taking space but had no success.
``A couple of stores expressed interest but said they were not ready to move to Norfolk,'' he said.
While Reid was searching for tenants, Chris Lee had been scouring Hampton Roads for vacant retailing space. Last July, Lee went to Reid with a proposal for leasing the former Farm Fresh store and renting the space to several small merchants.
Lee, a 40-year-old native of South Korea, described three similar facilities that he and relatives had developed in Chicago. Reid followed up on Lee's proposal by visiting the largest of the three malls, an 85,000-square-foot facility on Chicago's South Side.
``It was clean and well lighted, and they had good merchandise, including auto parts, shoes and clothing,'' the minister recalled.
Lee signed a 20-year lease for the former supermarket and set to work attracting merchants. He brought some to the mall through newspaper, radio and television ads and others through face-to-face contact at local flea markets, Lee said.
Despite the success that he and his relatives have had with their malls in Chicago, Lee said a discount mall that he tried to develop in San Diego four years ago turned out badly.
``We kept it two years and then gave it away. I lost a lot of money on it.'' Yet Lee figures he learned some lessons that he can apply to his Norfolk mall. One is the need to build ties with the surrounding community. Another is overcoming cultural differences with potential customers. To help with these tasks, Lee is relying on Reid's familiarity with the area.
Some of his 27 tenants have retailing experience. Even so, Lee is prepared for a heavy turnover. Merchants pay $18 a square foot per month for their booths and can lease space for as little as four months.
Conversion of the Campostella store is the first step in his long-term plan to develop as many as four of these facilities in Hampton Roads, Lee said. He expects to open the second one this spring. ILLUSTRATION: Color photo
MOTOYA NAKAMURA/Staff
Chris Lee, right, and the Rev. Milton Reid are confident of the
future of the Riverside Discount Mall on Campostella Road in
Norfolk.
by CNB