Businesses Struggle Without Anchor Store on Mooretown Rd.

By Amber Lester Kennedy Monday, September 19, 2011

Several storefronts at Williamsburg Market Shopping Center bear "Space for lease" signs.

Squires Gourmet will be closing its location off Mooretown Road by Halloween. Owner Brad Squires said many tenants signed five-year leases that will end around the same time, all around Oct. 31. He’s talked to fellow business owners and managers to get a feel for who plans to stay, and has the sense that his business won’t be the only one to close.

The shopping center hasn’t had an anchor since Ukrop’s closed on Jan. 31, 2009. A legal battle ensued over whether the shopping center’s owner, American General Life Insurance Company, can purchase the old Ukrop’s property and possibly attract another grocer to that location. Until that legal battle is settled later this fall, realtors with Divaris Real Estate are trying to lease space in a center that has struggled to attract customers since it opened in 2006.

Squires hopes to continue his business, but isn’t sure what its future will look like just yet. Trying to keep a business open in the shopping center without an anchor store “has left me broke,” he said.

He chose to open Squires Gourmet in its present location when he heard Ukrop’s would be opening a store on Mooretown Road. “Ukrop’s was the golden goose; anywhere they went, business thrived,” he said. Squires did some research and found that because Ukrop’s didn’t sell alcohol, wine shops often opened next door. He decided to do the same, and the idea of a wine shop/deli was born.

Five years later, he has had to get creative about bringing in foot traffic without a major draw in the shopping center. The restaurant has offered live music every Thursday and Friday for more than two years. Although he’s managed to keep the business open, the loss of Ukrop’s dealt a blow that made it difficult to recover.

“It just destroyed me…this shopping center has taken everything I own,” he said. “We’ve tried very hard. It’s not what we do, it’s the location.” Real estate professionals always say the most important thing is “location, location, location,” he said. “I am now the poster child for that.”

New York Nails owner Dung (pronounced “Young”) Lightsinger said business has been so difficult, she finds herself counting customers. She benefitted from having a loyal following from a shop she owned on Monticello Road, and said she is grateful for their continued support. Lightsinger decided to re-sign her lease for another five years, but at a lower rent rate. “I’m a fighter, I’m not a runner,” she said.

New York Nails was one of the first businesses to open in the Williamsburg Market Shopping Center, and when Lightsinger was negotiating her original lease, she was told she couldn’t sign until an anchor had been secured. She was interested in the location because she liked the idea of being part of a new development and building business in a new part of the area. “I took a big chance on this,” she said. “I depended on their name, their reputation.”

She doesn’t understand why Ukrop’s has blocked attempts to purchase the site in court, but said she’d like to see something different go in that spot, such as a bowling alley, movie theater or skating rink.

None of those options would be welcome, however, according to the original Operation and Easement Agreement arranged between the developer and Ukrop’s. The agreement listed a variety of businesses that wouldn’t be allowed, in order to present the shopping center as a “first-class” retail destination. The list includes bowling alleys, movie theaters, skating rinks, hotels or motels, hardware stores, fitness centers, convenience stores, gas stations, bars or taverns where alcohol exceeds 35 percent of the gross revenue and more. With Wal-Mart, Lowe’s and Home Depot within a mile of the shopping center, that leaves few options for the spot except another grocery store.

The remaining businesses include Dollar Tree, Quiznos, The UPS Store, Tropical Smoothie, Navy Federal Credit Union, Petco and Ross, among others. In his testimony in York-Poquoson Circuit Court on Nov. 29, 2010, Gerald Divaris, chief executive officer of Divaris Real Estate, testified that several tenants had a co-tenancy provision in their leasing agreements that allowed them to go to a reduced rent rate if the anchor store leaves. He said Ross originally paid $11 per square foot for rent, but was paying $3 per square foot at the time of his testimony.

At that time, Divaris told the court his primary objective was to fill the Ukrop's space, but said his company had not identified a prospect. He declined to comment for this story, citing the ongoing litigation between the owners and Ukrop’s.

American General Life Insurance Company purchased the shopping center through foreclosure for $7 million in June 2010. Soon after, it attempted to act on a provision in the Operation and Easement Agreement with Ukrops that would allow the company to purchase the empty grocery store. The provision stated the company had 18 months – 12 consecutive months since the store’s closure, plus an additional six months following that period – to exercise its repurchase rights. Ukrop’s claimed AGL missed the deadline, and put its fixtures, such as refrigerated units, shelving and display cases, up for auction.

Since then, circuit court judges have sided with AGL, granting an injunction to halt the auction and agreeing AGL had the right to repurchase. A settlement assessment date has been set for 10 a.m. Oct. 5. If the two sides choose not to settle, a four-day trial has been scheduled to start at 9 a.m. Nov. 14 in the York-Poquoson Circuit Court. AGL seeks $2 million and the ability to purchase the building, in hopes of once again having an anchor in the shopping center.