With the growth in online sales, together with a fragile economy and high unemployment cutting into their customer base, commercial real estate developers are appealing to consumers by creating multipurpose community destinations that provide a mix of retail, dining, entertainment, and services. While many developers prefer to include chain bookstores in their plans, others are approaching independent booksellers to fill vacant spaces. Assisted by industry insiders, a few developers are even becoming bookstore owners themselves to ensure that their properties include a stable bookstore.

At the Providence Towne Center in Collegeville, Pa., the 2008 economic crisis worked to one independent’s advantage. When mall construction began five years ago, P.K. Sindwani, the owner of Trappe Book Center, tried to persuade its developers, Brandolini Property Management, to add him to the tenant roster. But they wanted to lease space to big box stores, including Barnes & Noble. “At first they wouldn’t even talk to me,” Sindwani recalls, speaking to PW from his store, now called Towne Book Center & Cafe. “Then the economy tanked, and Barnes & Noble backed out.”

Brandolini contacted Sindwani and made him an offer he couldn’t refuse: they paid to renovate the 8,000-sq.-ft. retail space previously earmarked for B&N and gave him rent subsidies. The Towne Book Center opened its doors this past March, and is both the smallest and the only locally owned business in the mall, which currently is at about 50% occupancy. “[Brandolini] says I bring in a lot of people,” Sindwani says, noting that his sales have gone up 70% this year. “They’re happy, I’m happy.”

After Tabani Group, a national commercial real estate company, purchased the Village Mall in Danville, Ill., in May, one of its first orders of business was to find a bookstore to fill a 3,200-sq.-ft. retail space that had been vacated by Waldenbooks in January 2010. “We’re a family-owned company. Our directive is to bring in concepts that will do well and will serve the community well,” says Jeremiah Sunden, a Tabani acquisitions and leasing director. “And we like to support local and regional tenants.”

Sunden contacted Jackie Hillman, who six months earlier had closed her used and remainders bookstore in a nearby town as she looked for a new space elsewhere. Hillman’s store, A Novel Idea, is scheduled to open in the Village Mall by October 1. “It was the logical thing to do,” Sunden says, expressing confidence that although A Novel Idea is only one of among 35 to 40 tenants in the 500,000-sq.-ft. regional mall, it’s going to generate a lot of traffic, since it’ll be the city’s only general bookstore.

In Rapid City, S.D., news this summer that the local Borders would close prompted businessman Ray Hillenbrand to add a bookstore to the downtown retail/dining district he’s developing. Mitzi’s Main Street Books is scheduled to open by Thanksgiving and will be staffed by former Borders employees. The bookstore consultants group, Paz & Associates, is guiding Hillenbrand and his staff through the store’s first year.

While Hillenbrand decided to open a bookstore primarily because his late sister, Mitzi Lally, was adamant that Rapid City had to have a general-interest bookstore, two commercial real estate developers—Jeff Levy and Robert Langley—acquired bookstores located in malls they own for purely business reasons: each wanted to ensure that the profit-generating bookstore already there would remain.

“I never thought I’d be in the bookstore business, but circumstances dictated it,” Langley says. ”I’m a developer, not a bookstore person.”

“I couldn’t afford to lose them,” he insists, referring to his acquisition in April of the 25-year-old Lexington, Ky., Joseph-Beth Booksellers, an anchor store in the Mall at Lexington Green. The 45,000-sq.-ft. bookstore contains 25% of the mall’s total retail space. The Joseph-Beth regional bookstore chain, which at the time included seven Joseph-Beth stores and two Davis-Kidd stores, filed for Chapter 11 in November 2010. After creditors rejected founder Neil Van Uum’s reorganization plan, all of the remaining stores were put up to auction.

“There wasn’t an option to find another business,” explains Langley, who says that Langley Properties Co. is “involved” with malls in six states. “I wanted to make sure Joseph-Beth thrived into the future. It’s a big deal here. A lot of people love that store.”

Langley also ended up acquiring the Cincinnati and Cleveland Clinic Joseph-Beth stores. Mark Wilson, who served as the chain’s COO under Van Uum, currently is president and CEO of Langley’s company, Booksellers Enterprises, and oversees all bookstore operations and its 200 employees. Langley says that sales are “good” and expects them “to get better” as people realize that the three stores are still in business. In fact, Langley is so confident in the strength and stability of the Joseph-Beth brand, he is currently in negotiations to acquire a former Borders mall store in the greater Cincinnati area and add it to his Joseph-Beth holdings. Langley also is contemplating opening more bookstores inside hospitals, “because they’re small and easy.”

Like malls themselves, Langley says, the secret to success for a bookstore is to “be involved in the community, and you have to have the right mix” of books, other products, and services, such as the bistros in all three stores. Joseph-Beth is also moving away from traditional book events and focusing more on collaborations and tie-in promotions with local businesses and organizations. “It’s all about getting back into the marketplace and becoming ingrained in the community, without the cash flow constraints of the past,” Wilson explains.

When the Waldenbooks in Wakefield, R.I., closed in January after 30 years at the Wakefield Mall, an enclosed mall with 15 tenants, Jeff Levy, the mall’s owner, hired its nine employees and reopened the store a month later as Wakefield Books. “Waldenbooks had always done well,” Levy says, “and I wanted us to continue to provide customers with what they wanted. I am not sure something else would bring in more customers. I did what I could to continue to offer something the other centers in the area aren’t.”

Susan Novotny, the owner of the Book House of Stuyvesant Plaza in Albany, N.Y., and David Didriksen, owner of Willow Books in Acton, Mass., consulted with Levy as he set up his bookstore, and currently oversee store operations for him. While gross revenues are down at Wakefield Books, Levy says, net revenues are up from when the store was a Waldenbooks, as it had sold heavily discounted books. “I’m a numbers guy,” Levy says. “I’m very pleased, and the employees are happy not to have the bureaucracy of a major company, so they can try new things that’ll hopefully result in good sales.”

According to CoStar Group, a provider of commercial real estate data, the vacancy rate in malls containing Borders stores was 4.2% at the beginning of 2011; by late September, the vacancy rate in those malls will be 18.8% in the absence of new tenants. Novotny hopes that more developers will partner with independent bookstores to fill all those empty spaces, estimated at a total of 6.3 million square feet nationwide, according to DJM Realty, which was hired earlier this year by Borders Group to auction off store leases.

“A lot of malls will be going into their first holiday season without a bookstore. It’ll be interesting to see how they remedy that situation in 2012,” Novotny notes, adding, “It takes a developer with vision and money to do what [Levy] did, instead of just putting in another dollar store.”■