Central WA shopping center defies 'malls-are-dying' narrative

She was happy to keep running her clothing store in downtown Yakima — it’s where she was most comfortable.

“The thought of [being at a mall] scared me,” Amaya said. “I always thought I wasn’t ready.” 

But all that changed when she met with mall management in October. 

“They showed me some numbers — the number of people who come through the mall, how many people from out of town shopped at the mall,” she said. “I did think that, you know, the mall was dead and that a lot of people were shopping online.” 

But the numbers showed that this mall was not dying and could provide Amaya a path from recovery to growth post-pandemic. 

Amaya relocated to the mall a month later. 

The mall in Union Gap, a small Central Washington city in Yakima County of just over 6,100 people, is nearly full — thanks not just to big national anchors like Macy’s and Kohl’s, but also locally owned retailers like Wildjay. 

That’s a notable contrast to the ongoing narrative that malls were dying and that people were shifting all their shopping online. 

E-commerce sales in the U.S. reached upwards of 19% of all retail sales in April 2020, when the pandemic was in full swing, according to figures from the National Retail Federation. It has since declined to 15% of all sales as of February 2021. 

And recent numbers from Innovating Commerce Serving Communities, a trade organization for shopping centers and other businesses, show that enclosed malls are not experiencing the rapid growth they saw in the 1980s and 1990s, but aren’t in total decline either.

Last year, there were 1,158 malls in the U.S., a 12.9% increase from 2000. In comparison, there was a 57.4% increase from the previous 20-year period ending in 2000. 

Valley Mall general manager Linda DiLembo believes that people still want an in-person shopping experience, and malls and shopping centers can provide that.  

And shoppers seem to desire that in-person experience more after a pandemic when people could do nothing but shop online, she said.  

“There was a lot of thirst for going back into the shopping center,” DiLembo said.

From struggle to growth 

In the late 1990s, the Valley Mall, which is marking 50 years of operation this year, was struggling. 

While other malls in the U.S. thrived, the Valley Mall was in the shadow of the more prominent Yakima Mall in downtown Yakima.  The downtown mall had the major anchors — Bon Marche (now Macy’s), Mervyn’s and JCPenney. A Nordstrom was across the street. 

The retail mix at the Valley Mall was much less desirable — its major tenants were a Sears and a Rite Aid drugstore — and the mall’s location was out of the way. 

Despite this, a California company, CenterOak Properties, purchased the mall in 1999, as part of a four-property deal with First Union Real Estate Investments, a real estate investment trust in Cleveland. 

In its more than two decades of ownership, what is now CenterCal Properties — reflecting backing by the California State Teachers’ Retirement System — poured tens of millions of dollars into the mall to renovate the existing space and expand the mall’s footprint into neighboring vacant properties. The mall now has 600,000 square feet of retail occupied by 80 different tenants. 

And it would be the Yakima Mall that would spiral downward, starting with the closure of several retailers, including JCPenney and Nordstrom, in the early 2000s.  

And probably in the most symbolic move of the shift of retail from downtown Yakima to Union Gap — and from downtowns to suburban areas nationally —  Bon Marche relocated to the Valley Mall and opened in a newly constructed space in 2002. JCPenney would return to the Yakima area in 2012 when it opened in a newly constructed retail space in Washington Square, a new center within the Valley Mall shopping complex. 

The Yakima Mall closed in 2003. Today, it’s been repurposed into hotels, office space and condos, but plenty of vacant space remains. 

Retail expansion in and around Union Gap — by CenterCal Properties and others — continued right up to the start of the COVID-19 pandemic, firming up the once-small bedroom community as the region’s retail center.

Retail trade businesses in Union Gap generated $446 million in taxable sales in 2019, the last full year of data available before the pandemic from the state Department of Revenue. That’s 21.3% of the $2.1 billion in retail trade taxable sales throughout Yakima County.

Shifting trends 

In recent years, reports declaring the death of the mall have been plentiful. 

And for a good reason: National retailers that occupied malls closed stores or went out of business entirely, leaving numerous vacancies. 

And malls not able to fill those vacancies fast enough became ghost towns. Shopping centers such as Northgate Mall in Seattle and Lloyd Center in Portland come to mind in the Pacific Northwest. 

The Valley Mall was not immune to these trends. Over the past 15 years, retailers such as Mervyn’s, Borders, Gymboree and, most recently, Bed Bath and Beyond have closed numerous stores or gone out of business amid bankruptcy, leaving significant vacancies in the mall. 

But the Valley Mall managed to find new tenants to replace them relatively quickly. Pier 1 Imports closed all its stores, including one at the Valley Mall, in 2020. But a year later, a Guitar Center opened in its place. 

DiLembo said, the Valley Mall manager, said her shopping center benefited from a trend of national retailers taking another look at smaller urban and rural markets. 

The strategy for most retailers is to locate in populated urban areas first and eventually make their way to smaller metropolitan areas, such as the Yakima Valley, she said. 

As a result, it wasn’t unusual for shoppers in the early 2000s from Yakima to travel to Seattle or Portland shopping centers to visit retailers not available at home. 

Now, with those larger urban markets saturated — and shrinking — retailers still looking to grow saw an opportunity to open new locations in the smaller regions, DiLembo said. 

The Valley Mall, as a result, has been able to fill vacancies with new national brands, such as Guitar Center. 

But the Valley Mall’s management has also leaned in to becoming more of a community gathering place. 

“Good shopping centers were always that way, and the ones that survived always were [gathering places],” DiLembo said. 

That strategy included housing tenants that typically weren’t at the mall, such as an Anytime Fitness, and recruiting more local and regional businesses.

^{The Valley Mall, using its Kevin the Koala mascot, encourages people to wear masks during the COVID-19 pandemic} 

Working with pandemic challenges 

The Valley Mall maintained that strategy during the COVID-19 pandemic. The mall management worked with the Yakima Health District, providing tenants with information about changing restrictions.

It also worked with tenants on several projects to help them stay afloat. That included having designated curbside pickup spaces in the parking lot and setting up tents with heaters when restaurants could offer only outdoor seating. The mall also worked with tenants on rent, providing options to defer or even forgive back rent during the pandemic. 

“Everyone was scrambling to look for different opportunities to help keep [tenants] in business,” DiLembo said. “Our tenants are our lifeblood, and if they’re not around, I don’t have a job.” 

In 2020, the mall hosted drive-in Kids Club events featuring its Kevin the Koala mascot and offering take-home art kits. The event attracted hundreds of people each week. The mall continued to attract hundreds of participants each week in 2021, when the event returned to the mall with restrictions. 

The mascot was also used in the mall’s campaign to encourage the community to take precautions during the COVID-19 pandemic. “The whole point of Kevin was to encourage mask usage, but to make it less scary,” said Jacob Butler, the mall’s marketing manager.

Meanwhile, the mall also continued to recruit local tenants. Cascade Garden, a popular event venue in Yakima, operated its flower shop in the mall. The arrangement started as a temporary stint during the pandemic but has since become permanent.

Amy Gostovich had acquired the first location of her coffee shop, called The Newsroom, from a Seattle-based business owner in December 2019, just months before the COVID-19 pandemic. At the start of the pandemic, she was just starting to break even at the shop, located in a small neighborhood shopping center in Yakima. While she remained open, sales dropped drastically to as low as a few dollars in a single day. 

Taking the leap

During the summer of 2020, she received an email from Valley Mall management asking if she would be interested in opening a location at the mall.

It was a hard no at first for Gostovich. The mall was still closed at the time, and survival of her current location was top of mind. 

But she would continue to talk to the mall on and off, first by email, then through phone calls and, finally, a lunch meeting with DiLembo. 

Eventually, she decided to take on risk, signing a lease last summer. 

The biggest draw — the mall offered to take on the cost of renovating and designing the space, which lifted a key barrier to entry, Gostovich said. 

Gostovich also changed the shop’s name to Caffeine Connection Cafe to reflect its broad offerings beyond coffee. She said she came up with the new name during a brainstorming session with the mall’s management. 

She opened the shop during Thanksgiving weekend last year. Since then, she has drawn a loyal crowd of mall employees seeking a snack or lunch on their work breaks, drip coffee for the mall walkers who show up each morning and, of course, teenagers enjoying a Red Bull infused drink after several hours of shopping. 

Local and regional businesses make up about 20% of the tenant mix at the mall, DiLembo said. And that’s likely to increase. 

“We want to engage the community, and the community out here likes to support local,” she said.  

Indeed other malls in the Pacific Northwest, such as Pacific Place in downtown Seattle, have looked to local businesses to fill the void left by national tenants.

Wildjay opened its shop at the mall at the start of last year's holiday season.  And that season’s sales was a record for the retailer. 

Amaya, Wildjay's owner, said she still gets customers who have never heard of her business, despite running a shop in downtown Yakima for several years. She draws shoppers from throughout Yakima County and other parts of Central Washington. 

Now that she doesn’t have to think about generating foot traffic — being in the mall takes care of that — she can think more about her future.

In the immediate future, that means more time to promote her spring offerings. Eventually, she hopes to expand her presence at the Valley Mall. In the long term, she dreams of developing her Wildjay brand and selling clothing that would be sold at retailers across the U.S. 

“We already recorded our spring commercial, and we've already shopped and gotten all our spring styles already ready to swap [from the winter],” she said. “Where before, I felt like I was always playing catch-up. Now, I feel like I am ahead of the game. And I'm hoping to be two seasons ahead [in the future].” 

‘Community-centric’ focus

DiLembo and the mall’s management are also thinking about its future. 

A few weeks ago, the mall completed its renovation of its Center Court area. A variety of plants and furniture were laid out to give the space a more plazalike feel, encouraging shoppers to take a breather during their visit. 

The mall is also looking to expand its event offerings as it becomes safe enough, said Butler, the marketing manager. 

After leasing its parking lot to a local farmers market for several years, the mall will be creating its own farmers market, launching the first iteration this summer. 

In the fall, the mall is set to host the Estrella Awards, the annual event of the Central Washington Hispanic Chamber of Commerce, where DiLembo is a board member. The event will be held in the mall’s former food court — restaurants and other food tenants are now spread out throughout the mall. The mall plans to convert the mall food court into an event and public gathering space. 

For DiLembo, a mall can no longer just collect rent and hope for the best. Malls need to evolve to reflect the needs of both shoppers and tenants. 

“You have to be community-centric, and you have to really care about your tenants, work with them, do events, all of those things,” she said.