“First small business mall ever”: Johnstown Galleria owner says mission is supporting ‘mom and pops’ while chasing big-box retailers

Source: Tribune Democrat

JOHNSTOWN, Pa. – Raised in a poor village of then-communist Albania, Leo Karruli fled political and economic turmoil when the Mediterranean country’s communist party fell.

He made a dangerous voyage to Italy as a young man in 1991, and worked in a restaurant while planning to emigrate to America and become a U.S. citizen.

“In the beginning, it was tough for me,” Karruli, 57, said in his heavy accent. “You think about your mom, dad, brother, sister. But this is what you call sometimes the American Dream. America gives you the opportunity to open business, to create business, to make money and to create family and everything.”

At that time, thousands of miles from where Karruli was fleeing communism and the unrest that followed its collapse, the grand opening of The Johnstown Galleria would soon be celebrated.

The mall would enjoy its heyday through the 1990s, then it would begin a slow decline amid economic recessions, shifts in national shopping trends and multiple changes of ownership.

Two of the four large anchor stores with doors leading to the heart of the mall closed in 2018.

Many store and food court spaces in the enclosed portion of The Galleria were hollowed out by the time the mall went into foreclosure in 2020, even before the COVID-19 pandemic squeezed out more – including Victoria’s Secret.

Through the transition, The Galleria stayed open while creditors repossessed the site and prepared to auction it off to the highest bidder.

With enclosed shopping malls failing across the country, competitors in the online auction were widely expected to have other, non-retail plans for the property at 500 Galleria Drive.

Bath & Body Works, American Eagle and Spencer’s left The Galleria for the Richland Town Center in 2022, six months prior to the mall’s precarious placement on the auction block.

However, the bidder who won the mall for $3.1 million was Karruli.

For the past two years since acquiring the mall, he has been working to restore the American Dream there – not for himself, he says, but for the people in the Rust Belt community of Johnstown who want to see revitalization.

Holding it together

Karruli has replaced the mall’s air conditioning units and lighting. He’s repaired the children’s jungle gym, and the fountain. He’s paved the mall’s entrance roads and parking lots that had been long riddled with potholes.

He’s welcomed tenants who sometimes turn around and leave behind hefty overdue water and sewer bills, which he pays so that he can take a risk on welcoming others.

Like the escalator that is on a long list of features still to be repaired out of his own pocket, he wants to stop going sometimes.

“But I say, ‘No, hold on now.’ I have something I promised these people,” he said. “My promise is to keep it going until I fill the mall. Today you are working so tomorrow you get a phone call to make you happy. I have big things in mind.”

The food court has been filled since Karruli acquired the mall, and stores are repopulating, but multiple store owners said people tell them, “Oh, wow, how long have you been open? I haven’t been here in so many months” or “We didn’t know this mall was still open.”

The mall still lacks a new, big-box presence to grab people’s attention.

“But if they really would look at this closely, they’ll see what Leo is doing,” said Vic Smith, who recently retired as owner and president of The Italian Oven restaurant in the mall.

Lately, nearly every day, Karruli can be spotted at The Italian Oven, at times making pizza himself and doing cooking preparation when a chef is unavailable.

Smith, 74, said he came to Karruli in June to tell him that he was retiring and that his daughter, who ran the restaurant with him, wanted to pursue other interests. Smith was grateful to his loyal customers, but it appeared the restaurant would close.

“We were concerned about the employees who’ve made a living there, raised their kids there and still work there,” Smith said. “So, I thought, well, let’s sell it to somebody who can run it, and I thought, well, Leo is here. He’s trying very hard to make a go of that mall and keep it viable for the Johnstown community, which is admirable for him, very, very admirable. So, I thought, ‘I’m going to go speak to Leo.’ ”

They worked out a deal in 15 minutes, Smith said.

Not wanting to close the restaurant for even one day, Karruli has kept the business going without a hitch for the past four months.

He’s looking for the right person to take it over. But for now, Karruli – a seasoned restaurateur – is in the restaurant business.

After working in an eatery in Italy, he emigrated to the United States, where he worked his way up from being a dishwasher to opening his own restaurant with 40 seats, then another with 300 seats and another – until he owned 19 Italian restaurants in Florida.

A regular customer who was in property development recommended that Karruli invest his restaurant earnings in real estate, he said.

Karruli started with houses, and then commercial properties and eventually sold all of his restaurants to get into property development. He still owns shopping centers in Florida and North Carolina, but The Galleria is his first enclosed shopping mall and his full-time job.

“People are going off of malls, but I like it,” he said. “It’s a family of people together. It makes me feel comfortable. Here, you get in touch with the people and work hand to hand.”

Karruli’s approach may be a throwback to the mall’s early days, when it was owned by the local Zamias Services company, led by Galleria founder George Zamias, of Johnstown.

Over time and economic obstacles, the Zamias company sold off the mall to more distant owners. A Florida- based company, Adar Johnstown LLC, owned the mall at the time of foreclosure, though Zamias Services continued managing the mall for Adar.

Giving people a shot

The mall now has about 40 occupied locations, not counting a couple of new businesses Karruli said are about to open. Many of the tenants are well supplied with knowledge of Karruli’s strategy and express shock at his generosity and transparency.

Husband-and-wife business partners Matt and Jodi Rupert opened Mister Jays hobby store and tabletop game venue a year and a half ago.

Their success has led them to move into larger spaces in The Galleria on three occasions since they opened.

Recalling how Karruli gave their “island of misfit toys” a chance made Matt Rupert emotional – stating that a previous Galleria owner “wouldn’t give us the time of day.”

The former construction worker gathered himself as tears escaped from his eyes. In the pause, the chatter of about 10 of his store’s patrons could be heard as they played their games set up on long tables. Some of the patrons playing together had only met each other that day in the store, which is an example of the culture developing at the mall, Rupert said.

“He saw our information left behind from the previous mall owners and he reached out to us right away when I just didn’t think we were going to get a chance,” Matt Rupert said. “When he called us and gave us a shot, I was shocked.”

Jodi Rupert punctuated her husband’s comments.

“Leo is a special guy,” she said. “He’d give you the shirt off his back. How many malls give moms and pops a chance? He’s a special guy, that’s all you can say.”

Karruli’s father was a mechanic and his mother worked in a factory.

Living in Albania was difficult for his family, especially because his grandfather deserted the ruling communist party’s army in the 1940s, he said.

“It was very bad to live in the communist country because, if somebody deserts, they take your family from the city and put your family in the village,” he said. “They don’t give you the school. They don’t give you the right to do anything because they say, ‘Oh, his grandfather left the country,’ you know.”

After Karruli came to America, he brought his parents to become U.S. citizens, too.

“Everything I come from … my parents, they used to be poor people and still I’m not considering myself anything but a regular person,” he said.

Tenants said Karruli calls meetings to consult them on needs for mall repairs, and that he’s so reasonable on rent that he must be taking a loss. Karruli confirmed that he is taking a loss sometimes.

“I say it 100 times – I’m not in it for the money,” he said. “But what I’m doing with mom and pops, you can’t hold a business, you know what I’m saying? Moms and pops, I’m doing more to fill up the mall to bring the traffic to tell the big-box stores, ‘Hey listen, the mall is not dead.’ The mall is here for the people.”

Evelyn Vargas, owner of Gotham City Bakery, said, “It’s got to hurt his pocket at some point in time, but as long as we all stay together, we can do it.”

Vargas and her daughter relocated from New York City and opened Gotham City Bakery at the Galleria’s food court in July.

“Cake orders are flooding in now,” she said.

“You go to any mall, especially in New York City, and the first thing they want you to do is pay six months of rent ahead of time,” she said. “He doesn’t do that to you. He gives you somewhat of an open contract, see how it goes. If you want out, you can get out. He doesn’t lock you in there like most malls do. That’s why I considered this the first small business mall ever.”

She recently added an old-fashioned diner counter at her bakery where people can sit, talk and enjoy a meal, harkening to days when Gimbels and Macy’s had that personal touch, she said.

“Everything is too much internet right now. It’s shopping online,” she said. “The personal touch has been lost, and we need to bring it back. That’s what we are trying to do here.”

Drawing big business

From top to bottom, family-owned small businesses can be found at the mall, though for now, their hours and days of operations vary and are heavily dependent on individual circumstances.

“A lot of us are just starting out, so it’s hard for us to be here for the amount of time that people expect a mall to be open,” said Terri Yacko, owner of Yacko Art, a gallery on the second floor of the mall.

“But I’m hoping that, as this picks up, all of our businesses can grow and get more people working so we can be open more hours,” she said.

Yacko launched her business in June on the second level of the mall following the success of her mother and sister’s business, Apples and Bananas parent/teacher store, located across from Boscov’s on the first level of the mall.

“When they said how wonderful it was to work with Mr. Karruli, I said, ‘That would be a great place to try,’ ” she said.

For 11 years, Yacko was an art teacher before she decided to open her gallery. She now teaches classes, offers art party rentals for children, and displays the work of artists in her gallery.

“He’s given me a bit of a deal so that I can see if I can get this to work,” she said. “I know he’s trying to get small businesses like me to come in and see what we can do because he said the bigger ones will come in when the smaller ones are here, and the smaller ones will do better once the bigger ones are here, so it’s kind of like, ‘Let’s help each other out.’ ”

Sometimes Karruli stays until 3 a.m. in his office for paperwork and taking care of leases.

There have been many “bumps in the road,” Karruli said, and the time he spends at the mall puts a strain on his wife, he said.

“Sometimes I have too much because between the mall and the Italian Oven and everything, it’s getting to be a little too much, but I’m trying to get it done,” he said. “My dad was hard-working, too, and I never give up. I want to show the people something I’m doing for Johnstown.”

A slate of recently renewed leases has encouraged him to press forward.

JCPenney renewed its lease, he said.

In addition to securing that main mall anchor, he said Maurice’s clothing store, Shoe Dept. Encore, AT&T, T-Mobile and Claire’s all signed new leases within the past few weeks.

“So it makes me happy, and I work harder,” he said.

Gardners Candies, which left the mall prior to Karruli’s ownership, returned in September and has experienced a much stronger business.

“Our sales and foot traffic have almost tripled since we moved back here from our last location,” Gardners Candies store manager Haley Markel said. “I’ve seen more businesses open in the mall. The food court is great. Each place is now full. Many people, even if they are not visiting to shop, come into the mall for something to eat.”

However, big-box retailers want to see 80% occupancy of the mall, and then maybe they’d be interested, Karruli said.

“If I do that, tomorrow I can get a call and change everything,” he said. “It’s waiting for that time. Right now, I am at 65% occupancy. I’m working for more.”

Chasing big tenants

Target, Sam’s Club or Costco are at the top of his list of tenants he’d like to draw.

However, even if a big-box retailer calls him, there’s another limitation Karruli faces: He doesn’t own the sprawling, two-level, vacant anchor locations where they naturally fit at the mall.

Three of the four anchor stores, each with two public entrances to the mall, have been separately owned since the mall opened in 1992. JCPenney has been the only anchor store directly leasing from the mall.

With that recently renewed lease, Karruli said, “I can see a little bit of daylight for myself.”

Boscov’s department store is owned by the family-owned Boscov’s parent company that remains committed to the Johnstown market, recently completing a multi-million-dollar renovation.

But filling the vacant anchor locations formerly held by Sears and The Bon-Ton requires cooperation between Karruli and the owners of those spaces.

Karruli bid more than $1 million on the Sears location when it was auctioned a year after he purchased the mall. But he was outbid by a Michigan- based storage company with plans that did not include retail.

The Richland Township Zoning Hearing Board subsequently denied the request of Storage of America to turn the former Sears location into an indoor storage facility.

The zoning hearing board ruled in May that a storage facility was not fitting with the character of a retail district. Karruli and the family of small business owners who’ve worked to see the mall again become a retail hub cheered the decision and held a party at the mall.

However, Storage of America continues to own the Sears location and has sought to overturn the zoning hearing board’s decision at the Cambria County courthouse. That appeal was filed in June and remains open.

Karruli said he is hopeful that the owners of Storage of America might partner with him to bring a retailer instead of a storage facility to the building.

The Bon-Ton closed in 2018. Its space was sold in 2021, a year prior to Karruli’s successful bid for the enclosed portion of the mall.

Galleria Drive LLC, a subsidiary of Sara David Realty in Florida, owns the Bon-Ton location.

“When we first bought it (The Bon-Ton), tenants were thinking the whole use of the mall would have to change (to something non-retail),” Sara David company member Bennett David said.

However, that sentiment changed after Karruli purchased the mall, free of its previous debt, then moved to Johnstown and got to work.

“He has done a good job, and he’s filling up the empty stores,” David said. “The mall is stabilizing, it seems to me, and the feedback I’ve gotten is a little bit of interest from potential tenants in The Bon-Ton location, but not much.”

He said concerns about the mall’s foot traffic have deterred businesses from leasing, but Karruli’s continued work at the mall and the addition of the Park Home Furniture Store at 600 Galleria Drive in 2022 are elements that David has highlighted to attract potential tenants for the former Bon-Ton location.

“There are two possible tenants right now showing some interest in the property,” he said. “There’s nothing firm. We are just trying to get them interested in the space and the mall, which is improving, in my opinion, when I go there.”

The mall’s Christmas decorations are up. Black Friday is a day away, but The Galleria is also a place for Small Business Saturday shopping.

Karruli plowed the mall’s roads during a recent snowstorm. He had to do the job in a pinch because a maintenance worker was out.

The phone calls he makes with big-box retailers haven’t yet paid off, but eager small business tenants are met with enthusiasm.

“From the beginning, I had a vision,” Karruli said. ”I said this mall has potential … I know 100% this can come back with the hard work of not only me, but the people around me.”