Houston’s Galleria mall moved the black-owned store from its prime location

Ken Haggerty has come a long way from his humble beginnings, collecting and reselling sneakers as a side business in Houston.

After building a profitable consumer retail business, he hit the jackpot four years ago when he landed space in The Galleria mall. But now he feels scorned and sidelined by an exclusive deal the mall has struck with a new, larger retailer – something mall management says is normal in this industry.

Haggerty owns and operates Houston Calendara high-end contemporary urban streetwear retailer that sells clothing, backpacks, accessories and an extensive collection of new and retro sneakers – Jordans, Adidas Yeezy’s, Nike Air Max and more – with prices ranging from $250 to $3,000.

He said the mall’s owner, Simon Property Group, approached him in March, halfway through his three-year lease, telling him he had to sign another lease that banned him from selling shoes – one of its best-selling products.

Beginning Oct. 1, it will only be able to use the space for “non-exclusive retail of American and European urban streetwear and apparel,” according to the lease agreement shared with the Chronicle.

He also says he was told without explanation that he will have to move his retail store to another location in the mall – one much smaller and in “dead space” with less foot traffic. He said Simon Property Group never responded to his repeated requests for a long-term lease. Haggerty signed the new short-term deal.

The compromise of short-term leases

In a statement, Haggerty said his store was “good tenants” and “high performing partners” with The Galleria. He said having to move to the new space put him in a difficult position.

But that’s just one of the caveats for tenants of a short-term lease, typically more than three years, versus a long-term permanent lease for large global customers that typically lasts up to 10 years, says Jenny Harris, the Houston regional office. vice-president of Simon Property Group.

“Our short-term rental program is being used as an opportunity to bring these people in,” Harris said in an interview with the Chronicle. “We welcome these tenants almost like an incubator. We welcome them at a significantly reduced rent in our very large property.”

In exchange for a lower rate, short-term tenants agree to a 30-day termination clause in which management reserves the right to give tenants 30 days to vacate the space if they need it for any reason. whatever, she said.

“We generally exercise this clause whenever we have a permanent tenant who is secure for the space,” Harris added. “Whenever we have to exercise this clause, we do our best to find an alternative space in the center for the short-term displaced tenant.”

The owner of Agenda Houston, a popular black-owned sneaker and streetwear store, said they were transferred by The Galleria for a big-box competitor.

Tola Adegbite / Visual Influence

This new space is “where (Haggerty) first found success,” she said, on the second floor off Saks Fifth Avenue.

But Haggerty was upset with the changes. “Shoes are my passion. My bread and butter. It’s what Agenda is known for,” he said.

“They never offered me the opportunity to submit a competitive bid, and to my knowledge they didn’t tell anyone else in the mall that they couldn’t sell any more shoes, just me. It all seems very targeted and discriminatory.”

A spokesperson for The Galleria emailed the following statement:

“The tenant has been in the center for four years, and six months ago he negotiated and signed a new temporary lease agreeing to move and in return received a significant reduction in rent. We are operating under the terms of what has been mutually agreed and contract signed and expect our tenant to do the same. Any insinuation that we have acted in a discriminatory manner is baseless and completely unfounded. This is not how we operate and we categorically reject the assertion.

Preferred Global Tenants

Although the name of the new retailer is unclear, Simon Property Group has confirmed that it has granted exclusivity to a long-term global tenant who has committed to a permanent agreement for almost 10 years in 10 shopping centers different across the United States. This meant that Haggerty could no longer sell sneakers. at the mall.

“It’s intended to help protect long-term tenants who are paying significantly more,” Harris said. “We understand that this exclusivity is going to have an impact on Mr. Haggerty. We are negotiating in good faith with our tenants to support them. We have agreed to a very significant rent reduction of 50%.”

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Haggerty said he took the deal because he had no back-up plan at the time; his only options were to take the deal or get nothing at all. He plans to move into the new space in early November, he said.

He said he was still disappointed that Simon Property Group rejected his offer to stay in the larger space even after offering to pay more money. He had also asked if he could stay until December, noting that the Christmas holidays are the biggest sales month.

“I always pay on time,” he said. “I always play by the rules, I keep the insurance. I never wanted to leave. The goal was to stay at The Galleria and get a permanent space.”

The owner of Agenda Houston, a popular black-owned sneaker and streetwear store, said they were transferred by The Galleria for a big-box competitor.

The owner of Agenda Houston, a popular black-owned sneaker and streetwear store, said they were transferred by The Galleria for a big-box competitor.

Tola Adegbite / Visual Influence

Famous customers

Agenda, currently located on the second floor next to the LEGO store, has attracted a number of celebrities, mostly rappers and athletes, a spokesperson said, including Stunna 4 Vegas, Sauce Walka and Don Toliver.

Without sneakers, Haggerty estimates he loses about 60% of his profits.

“They’re pushing a particular demographic into part of the mall,” said Tia Manteca, Haggerty’s real estate agent. “Ken is an African American business owner and they shut us down and didn’t give him a chance to present his case. The temp hire contact basically diverted him to stay in the temp location, which which is the norm for most minority business owners.”

A new house

Prior to leasing space from The Galleria, Haggerty owned and operated stores at Humble’s Deerbrook and Baybrook shopping centers in Friendswood. In 2018, a former leasing agent approached him with the goal of diversifying their retail options, he said. At the time, it was a perfect marriage. And, Haggerty’s success at The Galleria – he recalls a queue for Nike‘s release of Travis Scott Air Jordan 4 – caused him to shut down the other venues.

As the date of Haggerty’s move draws near, he worries if he will see the same level of success. He fears the move will cost him loyal customers who have trouble finding his store.

The owner of Agenda Houston, a popular black-owned sneaker and streetwear store, said they were transferred by The Galleria for a big-box competitor.

The owner of Agenda Houston, a popular black-owned sneaker and streetwear store, said they were transferred by The Galleria for a big-box competitor.

Tola Adegbite / Visual Influence

He now has a backup plan in place with a new location opening in November at 3300 Kirby Drive in the Upper Kirby area that will include larger inventory, a large shoe wall and a VIP lounge for celebrity customers, according to a statement. But this location was originally intended to be an extension of its thriving Galleria location, not a replacement.

“I just hope for the best,” he told the Chronicle of his new location at the Galleria. “I’m really nervous about it because even though I’m down the street in Kirby, I’m known for clothes and shoes. Now it’s just a clothing store and I’m like everyone else. “

James T. Quintero