Kirkland's Totem Lake Malls sheds largest retailer - ShopSmart Bazaar out after dispute with mall owners
By MATT PHELPS
Kirkland Reporter Regional Assistant Editor
March 2, 2011 · Updated 2:27 PM
During the past month, Totem Lake Malls has thrived on the weekends. Finding parking has been more difficult than just driving to the front of the parking lot. The sounds of shoppers walking through the lower mall has replaced silence.
But that silence has returned.
Ken Grammer and Sig Rudowicz opened Shopsmart Bazaar on Jan. 15, but a dispute over the lease rate with mall owners has cost them thousands of dollars and forced them out of business.
“We have more than 60 vendors and we all have to be out by the end of the weekend,” said Rudowicz on Feb. 25. The upscale flea market’s last day of business was Sunday.
“Smartshop Bazaar’s temporary license agreement expired Jan. 31,” said Senior Director of Communications for DDR, Marty Richmond in an e-mail to the Reporter. “Developers Diversified granted the bazaar a one-month extension and at the end of February the agreement naturally expired.”
Rudowicz said when he and his partner started the business they contacted DDR/Coventry about leasing the 40,000-square-foot space that once housed the mall’s anchor tenant, Lamont’s. The two businesses agreed to a three-month lease of $2,000 a month, with the caveat that Rudowicz and Grammer would have to clean up the space.
“We spent $4,000 to clean the carpet, $1,000 to replace all the lighting and $4,000 for all the signs that are up around the mall,” said Rudowicz, who also spent thousands of dollars on advertising. “We also spent $300 for a Kirkland business license. They didn’t really want to negotiate a rent until we fixed the place up.”
It took Grammer and Rudowicz nearly two months to clean the space, which included new carpets, ceiling tiles and lighting that was ruined by multiple roof leaks.
DDR/Coventry came back to Grammer and Rudowicz wanting them to sign a long-term lease for the space. Initially, DDR/Coventry wanted the two men to sign a $5,000 per month, six-month lease with an option for six more months. The rate was the same amount that Halloween Express pays for three months during the fall. Rudowicz and Grammer told DDR/Coventry they would be able to build up to that after a few months.
In the meantime, the ShopSmart Bazaar began to build a customer base that the mall has not seen in a long time.
“We had people coming up to us saying that they didn’t even know the mall was here,” said Rudowicz. “We had all the other store’s managers coming up to us thanking us for moving in because they had their best weekend in years.”
Greg Olsen, salesperson for Sleep Country USA, said since ShopSmart Bazaar opened, business has been “excellent.”
“Business on the weekend has tripled,” said Olsen. “The bazaar has drawn quite a crowd.”
But after just three weeks of being in the space, DDR/Coventry came back to Rudowicz and Grammer asking for $10,000 a month in rent. DDR/Coventry extended the original contract a fourth month through the end of February.
“They said that they had a furniture auction place out of Utah that was willing to pay $10,000 a month and if we could not come up with that we were out,” said Rudowicz, noting two the malls already has two furniture stores, including Totem Lake Furniture and Eagle Furniture, which is going out of business.
“We are excited to welcome national furniture retailer, World of Décor, to Totem Lake Malls, which will take possession of the bazaar’s former space March 1, 2011, and open shortly thereafter,” said Richmond.
Grammer and Rudowicz said DDR/Coventry told them the lease price is not negotiable. But the businessmen cannot afford $10,000 a month.
“We have 60 vendors and you’re going to put them out on the street,” Rudowicz told the mall owners. “We asked last week, ‘can we please stay through March to recoup some of our losses?’ They called the next day and said ‘nope, can’t do it.’”
One of the most shocking things to Rudowicz was a $3,700 bill from DDR/Coventry for electricity and administrative fees.
“I could tell you where they can stick that,” said Rudowicz. “I have worked 55 straight days on this and I just don’t care anymore.”
Both men work in marketing during the week and were putting the ShopSmart Bazaar together in their free time.
Rudowicz said he is too exhausted to take the issue to court: “How can I go after them (the mall owners) with everyone else suing them? What do we have to do, get in line?”
Totem Lake Malls is currently part of a $500 million fraud lawsuit that Coventry filed against DDR in New York state in 2009.
Coventry accuses DDR of allowing the Totem Lake site and 11 other properties nationwide “to flounder and ultimately fail, while focusing on its real goal: to collect as much in fees as possible while making only the most cursory effort to perform its responsibilities.”
Whatever is to blame for the Totem Lake Malls’ failure, Rudowicz said it has to do with greed.
“The mall owners think the mall is all gold now,” he said. “So let’s see if they can get someone into this black cave and make it work.”
On Feb. 24, Grammer realized that one of the roof leaks that had caused the initial damage had returned, soaking the carpet and destroying some of the new ceiling tiles they had installed. He said they are just lucky no one was in that space when the tiles gave way.
As for relocating ShopSmart Bazaar, it’s probably not in the cards for now, says Rudowicz.
“I don’t know if we can find another place and we have so much money invested here,” he said. “I think it is typical for that place ... We made that place look nice. It looks like a market place in Italy.”
Rudowicz said they looked at a place in Factoria Mall in Bellevue but that it was “all gutted too,” and that he did not want to start over.
Rudowicz and Grammer had the task of telling their vendors on Saturday morning that the weekend was their last.
“I’m downright mad,” said Mona Rouse on Saturday as dozens of shoppers shuffled through the flea market looking for final bargains. “Even Boeing gives you two weeks to vacate.”
Owner of Mona’s Needful Things, Rouse sells magnetic jewelry and other hand-crafted items. Before coming to ShopSmart Bazaar, she sold her wares at City Marketplace, an indoor marketplace in Lynwood. She said she will go back to selling there, though her business was thriving in Kirkland.
“This is just more upscale,” said Rouse. “My business is climbing every week. I even have repeat customers.”
Many of the vendors were business owners that had merchandise in storage lockers after not being able to afford rent for their storefront.
Some vendors, like Khaleel Grant, were new to business and used the Kirkland flea market as a start-up opportunity. Grant, who owns Chance’s Used Furniture and Housewares, said his sales have “jumped by one-third each week. It’s a great start-up opportunity. There’s no other options like this in Kirkland.”
One of the vendors had sold everything in their storage space during the past month. Others are living in their cars and Rudowicz and Grammer took a chance on them by allowing them to sell before paying rent for the stall, which worked out for both parties. The Bazaar became a way for many of the vendors to get back on their feet.
“It just ripped my guts out that I had to tell them we’re out - we love these people,” said Rudowicz. “We want to see these 75 people make it. I have a conscience.”
Editor Carrie Wood contributed to this report.Contact Kirkland Reporter Regional Assistant Editor Matt Phelps at email@example.com or 425-822-9166 ext. 5052.