The slow demise of Riverbirch

Built in the late 1980s, Riverbirch Corner Shopping Center was once the go-to for retail in Sanford. The past decade, however, has seen a mass exodus of shops and a steady decline in the appearance of the once-popular center.

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By Billy Liggett

Malls dominated the American retail landscape in the 1980s and 90s, offering shoppers a one-stop mecca that not only delivered clothes, toys, electronics, food and movies; but also a social hub for teens and adults alike.

Sanford didn’t have a mall in the 80s, but the end of that decade ushered in the next best thing.

Riverbirch Corner Shopping Center.

Anchored by Belk and J.C. Penney, Riverbirch in its heyday had all of its 25-plus retail suites occupied and its parking lot regularly full of cars. It was once home to fireworks shows on the Fourth of July, lights and impressive window displays during the holidays and even concerts and large gatherings outside of the Sam Goody record shop.

Today, Riverbirch has more empty suites than shops. And this month, one of its most popular occupants — Kathryn’s Hallmark — will leave for greener pastures across U.S. 1 at the Spring Lane Galleria. The lost business, the deterioration of buildings and the parking lot and an absentee owner known for buying up malls and strip malls and putting little investment into them are all pointed to as reasons for Riverbirch’s slow demise.

“It’s extremely frustrating,” says Bob Joyce, economic development executive director for the Sanford Area Growth Alliance. “I feel like Riverbirch has reached its low point — other than it just closing up, I don’t see it getting much worse. And it’s a shame, because it’s a great location. It was a great location in the 80s, and it’s a great location now. We’d love to see a comeback.”

IT WAS SPECTACULAR

The signs along U.S. 1 — then just a two-lane highway with a stop sign at the Spring Lane intersection — began appearing in the late 1970s.

“NEW SHOPPING CENTER,” coming soon.

Behind that sign, and a winding creek running through acres of rolling farmland owned by the Wilkins family.

Rumors swirled for the next five years as to what that shopping center would look like. Some believed an indoor mall was coming to Sanford — in 1987, there were more than 30,000 malls in the U.S. accounting for more than 50 percent of the retail dollars spent. By the end of the decade — after a few delays in construction and issues with the owners securing loans without tenants in place — Riverbirch Corner was born as a strip mall.

And the shoppers were ready for it.

“When it opened, it was spectacular,” recalls Joyce, a Sanford native. “It told us that Sanford had arrived. We had a shopping center that was new and sparkly with a big, open parking lot and tons of lighting.”

Riverbirch’s popularity was a blow to downtown Sanford and the crosstown Kendale Plaza, which was built in the 60s. The new shopping center “stole” J.C. Penney and Belk stores from Steele Street and gave Sanford residents west of U.S. 1 little reason to make the trip to Kendale (another strip mall that has struggled and seen steady decline in recent years, though major renovations and an effort to revitalize Kendale are currently under way).

Belk eventually split into two stores, keeping women’s clothing in the original store and moving men’s clothing, bedding, kitchen wares, children’s clothes and additional items to the old Winn-Dixie next door.

Meg Moss, the executive director for the Sanford Area Chamber of Commerce, moved to the area in 2002 from Washington, D.C., and she says her best memories of Riverbirch were the Fourth of July fireworks shows.

“I was a member of the Central Carolina Jaycees at the time, and we would stand with donation buckets lining the entrance to the shopping center,” she says. “The cars came in droves; some folks dropping in a little change and others giving $20 for their chance at the best seat in Sanford to watch fireworks. At the time, the parking lot was well kept, and I remember some great lighting and decorations around Christmas. I’d take my sons to have their hair cut at J.C. Penney, and we always ended up in the store afterward, buying back-to-school shoes or school uniforms.

“It was a big part of our lives.”

Not long after shopping center opened, Joe Purce was riding around Sanford for the first time with a friend from Raleigh when he first saw Riverbirch.

“It was beautiful,” he says. “I remember looking around and thinking, ‘This is so great for this area.’ And it was. So, lo and behold, I got a call from someone at Hallmark not long after that, and they asked me if I was interested in running a store. My life changed forever. And for the better.”

ABSENTEE OWNERS

Purce has owned and operated Kathryn’s Hallmark for nearly 30 years. He says Riverbirch was at its peak in the late 90s. The owners at the time, Southern Realty, ran things with efficiency and created a merchants association that afforded its business owners up to $50,000 for promotions and advertising.

“Everything was maintained extremely well,” he says. “The relationships between the landlord and the tenants were excellent. We’d have property managers visit us all the time to review things, and a promotions manager would be in touch. Everyone was very active in trying to promote Riverbirch as a whole so we could succeed and so the public could be served.”

Purce points to 2005, around the time Southern Realty sold Riverbirch to an investor — which sparked a series of short-term investments and sales — as the beginning of the end for him.

“Buildings began to deteriorate from lack of maintenance; businesses were hurt from the lack of promotional funds that were paid with rent and never fed back into the shopping center,” Purce says. “It’s been neglected to the point where last fall, my employees were afraid to leave the store at night, because the lighting was so bad in the parking lot. I just had to ask an employee to grab a mop and a bucket because of all the rain we had last night. And that’s an ongoing problem.

“And it’s such a shame. It was a beautiful shopping center.”

Hope arrived in 2017 when Genesis Properties sold Riverbirch and its 205,000 square feet of retail space to Igal Namdar of New York, CEO of Namdar Realty Group and Mason Asset Management.

That hope was short-lived.

Namdar and Mason has amassed more than 120 shopping centers nationally in recent years — their strategy has been to scoop up properties for relatively low prices, and often, those properties are in need of redevelopment or are located in underdeveloped areas. A 2018 article by Reuters reported that Namdar invests “as little as possible on many of their properties; the aim is to hold the assets, not redevelop them.”

From the Reuters story:

Namdar and Mason typically spend 20 to 50 cents per square foot on maintenance. This compares to an average of about 60 cents per square foot that U.S. mall owners spent on mall upkeep in the first quarter of 2018 … according to National Council of Real Estate Investment Fiduciaries.

Namdar and Mason have spent so little on the malls they have acquired, they often yield a 10- to 16-percent capitalization rate, a gauge of the investment’s rate of return. This tops last year’s average U.S. mall capitalization rate of 5.4 percent, and even the 9 percent rate mall owners enjoyed on average in their 1990s heyday.

Just over a year after acquiring the property, Namdar was notified by Sanford city officials for several code violations — large potholes and poor lighting in the parking lot just a few of them. The grass at the BB&T Bank building in front of Belk also needed to be mowed, and there were landscaping issues throughout the property.

“We’ve been reaching out to the company by telephone, but they stopped answering our calls,” Barbara McMillan, code enforcement supervisor, told The Rant back in February 2019.

Namdar has not answered a request from The Rant to comment on tenant complaints or its plans for Riverbirch. The CEO told Reuters they do their best to make their tenants happy.

“When you own 100 retail properties, of course you’re going to have people having complaints… if there are issues, we deal with them,” Namdar told Reuters. “We have a very high retention rate for our tenants, which shows us we are doing a good job.”

Oliver Centeno is Riverbirch’s newest tenant, opening Lilly’s Restaurant, which specializes in Mexican food, in late May. Centeno chose Riverbirch and the spot that’s been occupied by several restaurants in recent years because the rent was good and the lack of similar restaurants in west Sanford.

After less than two months, Centeno says business has been good (not great) despite the pandemic. But already, he has issues with Riverbirch ownership.

“They don’t respond. They don’t do anything we ask them. We’re having a lot of problems with our roof and leaking, and we have issues with parking. There’s air conditioning problems. There are issues around the [nearby] duck pond. All of this, and we get no response,” Centeno says.

Lilly’s is the rare “new business” for Riverbirch lately. More than half of the shopping center’s 26 suites are empty. Belk is the mainstay, and Roses — a discount retail store — has held the second-largest suite (closest to U.S. 1) for the past five years. Maurices and Bath & Body Works are the two most recognizable names still standing.

Gone, however, is Hibbett Sports, which closed in 2019 after more than two decades in business in Sanford. The biggest recent blow came with the departure of J.C. Penney, which closed just months after Hibbett. Penney’s departure had less to do with lack of traffic at Riverbirch and more to do with the chain’s national troubles — it was one of 24 stores (another located in Cary) to close in the second quarter of 2019.

The departure of Kathryn’s Hallmark — which officially closed its Riverbirch location in July to prepare for the August move to Spring Lane Galleria — might not be the death knell for the shopping center, but it doesn’t bode well for its future.

“We’re not leaving because business is bad,” Purce says. “We’re less than a mile away — our clients are excited about the move. We’re constantly being asked about the new store.

“My wife and I want to continue doing what we’re doing, and I think we’ll be able to serve the community better at our new location. We’re ready to put [Riverbirch] behind us.”

IT’S NOT DEAD, YET

Even before the pandemic, malls in the U.S. were struggling.

In 2017, Fortune reported that 25 percent of malls in this country would close by 2022. In July of this year, the New York Times said hundreds more will close in the next five years — “which has the potential to reshape the suburbs, with many communities already debating whether abandoned malls can be turned into local markets or office space, even affordable housing.”

Despite the downward trend of malls … despite the current economy … despite the rise of online shopping … despite the pandemic … and despite the decade-long struggles, there’s hope for Riverbirch Corner Shopping Center.

No, really.

A 2020 study by the research firm Placer.ai (as reported by the fashion magazine Glossy) found that outdoor shopping centers and open-air malls were struggling … but they were struggling far less than their indoor mall counterparts in the month of June. The article suggested people are “desperate for community” during the pandemic, and they are able to stay more socially distant in outdoor shopping centers.

Bob Joyce agrees with this assessment.

“The one thing that might help Riverbirch today is that it’s not a mall,” Joyce says. “You only have to drive a half hour up U.S. 1 to Cary Towne Center, which looks almost pitiful now. You can’t visit the food court, the children’s play areas are roped off … we don’t know how long the pandemic will affect retail, but right now, outdoor malls have an advantage.”

Another thing Sanford has going for it? Sanford.

The city is growing. The housing market, despite the pandemic, remains strong. New developments are in the works. Industries are moving here — four of the Top 25 new job creators in the state reside in Lee County, according to a list compiled this summer by Business North Carolina Magazine.

Sanford is still a good location for retail, Joyce says. The south side of the city has seen a retail boom in the last six years, and growth is on the way in the Tramway area, just south of Riverbirch. The future housing development in the Deep River area — expected to bring nearly 1,000 new homes — will be about five minutes up the highway from Riverbirch.

“Income levels in the two to three miles around the area are as high or higher than anywhere else in the county,” Joyce says. “I honestly think there’s potential. Experts will argue that online buying will only increase, but shoppers sure do like picking up their goods [rather than waiting for it to arrive in the mail]. Curbside pick-up … that’s perfect for an outdoor strip center. We can reconfigure some of these stores and rethink things a little.

“And you need owners who are willing to work with their tenants.”

Adds Meg Moss: “It’s a highly visible location along a busy U.S.1, and we can boast about a popular greenway that runs right along it. With the right investor who has the right vision, Riverbirch has the potential to be great again. In talking with a few other community leaders, the idea of making the Riverbirch area into mixed-use commercial and real estate could be very attractive … again, to the right investor. Additional residences whose households have the right income could really save Riverbirch.”