It’s been a tough year for the Shops at Rivercenter mall – hit with the double whammy of a longstanding decline in retail and a historic pandemic that, almost overnight, cut off the gusher of downtown tourists it has come to depend on.

But while the recent announcement of Macy’s imminent closure there – an anchor tenant for the past 15 years – might seem like a blow, it also could be an opportunity, mall experts say.

Firms are already lining up to look at a potential lease at the mall owned by New York-based Ashkenazy Acquisition Corp., which owns such retail centers as Boston’s Faneuil Hall Marketplace and Union Station in Washington, D.C.

“We are in active discussions with multiple brands interested in the rare availability of a space of this size within this high-profile property,” said Rivercenter spokesman Chris Santarelli, in an email. “We will hopefully be able to soon announce a new tenant expanding their footprint within or now entering the market at Rivercenter.”

A group of people in suits was seen touring the Macy’s space late last month with mall management, shopkeepers and staff on the mall floor told the San Antonio Report.

Large department store spaces like Macy’s, at approximately 100,000 square feet, have been converted to everything from crayon-themed amusement parks to Amazon distribution hubs.

Right now the space is plastered with signs announcing a store closing sale, with naked mannequins lining the walls and stacks of discounted rugs on the floor.

It wouldn’t be the first large-scale conversion that the mall, which opened in 1988, has made out of a former department store space.

A section of Macy’s department store at the Shops at Rivercenter is stacked with dormant display shelving and close-out sale signage. Credit: Waylon Cunningham / San Antonio Report

When the Dillard’s department store closed a decade ago, the historic Joske’s building it occupied was reconstructed into a collection of chain stores, restaurants and entertainment – largely aimed at capturing the growing number of tourists wandering the River Walk with overstuffed pockets. New attractions took hold like Dave & Buster’s sports bar and arcade, and a multimedia museum display for the Alamo called “Battle For Texas: The Experience.”

By the end of the Joske’s building’s reconstruction, part of a larger renovation project, already more than half of the mall’s visitors came from outside the county, and these visitors were responsible for about three-quarters of the mall’s sales, a Rivercenter mall manager told the San Antonio Express-News at the time.

The pandemic and its related impact on business and leisure travel has meant far fewer visitors in the downtown area.

“Tourism, retail, and restaurants are all finding it much more difficult right now,” said Sarah Esserlieu, the economic development director at Centro San Antonio, an advocacy group for the downtown area.

San Antonio’s tourism industry employed 105,000 workers in November, a decline of 24 percent from a year earlier, according to the Federal Reserve Bank of Dallas.

The lack of tourists, repeated shutdowns, and the general apprehension of local residents to visit the mall during a pandemic have only added more stress onto a mall already battered by the decline in retail.

On a recent weekday, a young man rode his skateboard down the mall’s cavernous hallway, pockmarked on either side by shuttered restaurants and storefronts.

Several escalators were not functioning, with shopkeepers saying they had been broken since the summer.

“Even on weekdays like this, it used to be packed,” said Jacob Carrion, a floor salesman with Shoe MGK. “People would fill up around the booth. Now I might get one sale,” he said, adding that the weekends are a little better.

At Harris Jewelry, which has served military personnel and their families for years, display cases that once held jewels now sit empty. The San Antonio location is “temporarily closed,” according to its website.

Harris Jewelry at the Shops at Rivercenter is devoid of inventory. The company’s website says the location is closed temporarily. Credit: Waylon Cunningham / San Antonio Report

In the lower-level food court, a Dairy Queen shut down earlier in the pandemic has not reopened. Several of the food court venues are simply walled off. A Chili’s restaurant upstairs is shuttered.  

In September and October, the mall sued 15 tenants for failure to pay rent.

Venky Shankar, research director at Texas A&M University’s Center for Retailing Studies, said these kinds of suits have become common during the pandemic.

“Right now, almost all malls are involved in some litigation with tenants,” he said. “Inevitably, some tenants have faced the hardship worse than others.”

Some of the Rivercenter tenants facing lawsuits have held leases there for decades. Morton’s steakhouse – from which the mall is seeking $100,000-200,000 in relief – came to the mall in 1991. Some, like Potbelly Sandwich Works, never reopened after the shutdown last year. At least one store has been locked out of its storage space since last summer.

One tenant, U.S. Polo Assn., wrote in its challenge to the lawsuit that the pandemic, as well as state executive orders and local emergency declarations, have “completely frustrated the purpose of the lease as defendants cannot operate their retail stores.”

Santarelli, the mall spokesman, said in an email that the mall has “been able to work out solutions with the vast majority of our tenants to ensure a sustainable business path moving forward.” He declined to specify how many continue to owe back rent.

“The pandemic has certainly had a negative impact on many of our tenants’ businesses,” he stated. “However, we expect most should recover as vaccine distribution progresses and we have worked closely with them to identify both short and long term solutions to maintain a vibrant business environment at the Shops at Rivercenter.”

Rivercenter also has filed other lawsuits to improve its bottom line. In a move that would allow the mall to pay less in property taxes, the mall also is suing the Bexar Appraisal District to challenge what it calls an excessive valuation of its properties in 2020.

The mall is being sued by one of its vendors, Cintas, which supplies uniforms, rugs, and other branded items. Cintas filed a suit last spring demanding more than $47,000 in damages for alleged unpaid invoices, missing or damaged merchandise, and a prematurely ended contract.

Cintas did not return a call for comment. Santarelli said the mall does not comment on active litigation.

The challenges brought by 2020 and the pandemic only magnified an existing, downward trend for retail.

“Malls were already over-stored and somewhat outdated in concept before the pandemic struck,” Shankar said.

The end of the Macy’s era likely did not come as a surprise to the mall, or to Rolling Oaks Mall, where another Macy’s location is closing. Last year Sears closed its 150,000 square foot store at South Park Mall and a similarly sized one at Rolling Oaks Mall.

As the pandemic turned up online shopping, many stores buckled. Last year, 40 chain retailers declared bankruptcy and some vanished. But against this tide, retail has not fared as poorly in San Antonio as it has in other cities.

The Sears sign at the Park North location has been removed.
The Sears at the Park North location near San Pedro and Loop 410 closed in 2018. Credit: Scott Ball / San Antonio Report

San Antonio’s retail occupancy at large saw only a slight decrease from last year, dropping from 94.5% to 93.6%, the lowest compared with other major Texas cities surveyed, according to a recent report from commercial real estate services firm Weitzman. “The outlook for the San Antonio retail market in 2021 is continued stability, especially if the promised curtailment of the COVID-19 virus occurs due to the distribution of the new vaccines.”

But, the report warned, the drop-off in occupancy from the pandemic may linger if tenants granted deferred rent continue to struggle.

And zooming out from San Antonio, some reports expect store closures to be even worse in 2021 after pandemic-specific relief and rent deferments run out.

Esserlieu, with Centro, said the Macy’s closing down presents an interesting opportunity.

“It’d be fantastic to see something innovative go in its place – something creative,” she said.

This article has been updated to correct that Macy’s has been an anchor tenant at the Shops at Rivercenter for 15 years, beginning in 2006.

Centro San Antonio is a financial supporter of the San Antonio Report. For a full list of business members, click here.

Waylon Cunningham

Waylon Cunningham

Waylon Cunningham writes about business and technology. Contact him at waylon@sareport.org.