The Mall at Shelter Cove on Hilton Head Island is in a "downward spiral" in sales that poses a "serious problem," owner Petrie Ross Ventures stated in a recent letter to the town about the mall's possible redevelopment.
The letter, to notify the town the mall was pulling out of a plan to build a theater, sheds new light on the financial condition of the island's only enclosed shopping center.
In the letter, company chairman Walt Petrie said the company still believes in the mall but would like to discuss alternatives to building a 12-screen movie theater that company and town officials once hoped would revitalize the property. Those plans were scuttled because Petrie Ross Ventures could not secure financing, the letter said.
Alternatives include tearing down part of the mall and "replacing some of the retailers that are not helping sales," the letter states.
"There is little to report other than the economy has crippled the financial markets, and trying to find funding to expand the mall at this time is virtually impossible," Petrie wrote. "... We are doing everything possible to keep the lights on but cannot control the market."
The mall's future is further clouded by other developments coming to the area, Petrie wrote. "The new retail being built in Bluffton is not helping the leasing situation, and our limitation on square footage is compounding our ability to attract some retailers who have expressed interest."
Now that the theater plan has fallen through, it is again uncertain if the town will change development limits in place since the mall site was developed as part of Palmetto Dunes in the 1980s.
In 2007, mall officials began seeking a zoning change to add about 50,000 square feet to the shopping center, which spans about 275,000 square feet. Last year, the Town Council approved a revised development agreement that allowed the theater to be built within five years.
Town officials say the additional space the mall won can only be used for a movie theater, and Mayor Tom Peeples said Wednesday he might not be as receptive to a plan for something else.
Peeples supported the mall's expansion because he believed an upscale theater was a necessary amenity for the island, he said. Any proposal seeking additional space would only win his support if it similarly benefited the town, he said.
"I don't have a closed mind, but I'm not sure what they can bring to the table that's beneficial to the whole community," Peeples said. "I don't think I'm going to be quite as gung-ho."
Adding more shop space would not be appealing, Peeples said.
Belk recently completed a major expansion, but several other storefronts are empty.
"I don't have quite the enthusiasm for additional retail just for the sake of retail," he said. "If it's just a proposal that's good for the mall and nobody else, that's not exactly the same conversation."
Peeples said he will reserve judgment until mall officials come forward with a new plan. He said he was scheduled to meet with them next week.
"Let's just see what the proposal is, and then I'll react to that," Peeples said.
The mall could receive a short-term infusion if it works out a deal to temporarily accommodate tenants that need to relocate while Tanger Outlet Center I in greater Bluffton is being demolished and redeveloped.
LaDonna Shamlou, outlets general manager, said she hopes such a deal will be in place soon. "It's moving pretty quickly, but it's still in negotiations," Shamlou said.
The mall should also soon get one other new occupant.
The Art League of Hilton Head, which the town picked late last year to sublease a 4,500-square-foot storefront for $1 per year, intends to go ahead with plans to consolidate its gallery and classrooms in the former Foot Locker, said Terry Brennan, the immediate past president of the league who is managing the move.
Brennan said he's not worried about the league's future home.
"There will be a lot of other shopping centers that will disappear before that one does," he said.
Mall officials could not be reached for comment Wednesday.