|
|||||
| |
The Blade (Toledo, OH)
By Jon Chavez, Blade business writer
1-07-01
The impending loss of Toledo’s two Montgomery Ward department stores is likely to mean an overhaul of the beleaguered North Towne Square and a less predictable but obviously gloomy near-term future for Southwyck Shopping Center, experts on malls say.
North Towne, which lost two department store anchors and a theater complex in the last three years, will have no anchors after the Ward store closes, probably this spring. The Ward chain revealed two weeks ago that it is going out of business and closing its 250 stores nationwide.
Without anchors, North Towne’s owner, Indianapolis-based Simon Property Group, could begin remaking it into more of a strip shopping center with stores such as Kohl’s, Target, or Best Buy, which are known as big-box retailers because of their size and powerful shopper attraction, said mall consultant Stan Eichelbaum, of Cincinnati-based Marketing Developments, Inc.
"They would need to study the reuse potential of the land, but Simon has reconverted malls into strip centers," he said.
Added Mark London, a Chicago mall consultant: "If anything, this may hasten the transformation of North Towne. More than likely, it will become a big-box power center in the future."
Southwyck, however, would have a hard time attracting such big-box stores, experts said, plus it is likely to be hurt by the announced Mall at Fallen Timbers, a four-anchor, 1.2 million-square-foot project off U.S. 24 near I-475/U.S. 23 in Maumee.
The new mall’s developer, General Growth Properties, Inc., of Chicago, has not revealed its anchor stores on the 130-acre site for which only limited preparation has been done. But the company could consider Southwyck’s loss of Montgomery Ward as a signal to move quickly on its project, said Mr. London, who is a former General Growth executive.
At Southwyck, Dillard, Inc., operates a department store and a store selling merchandise for the home in two of the mall’s three anchor spots. Dillard’s could be a target of General Growth for its project, and it might try to force the chain to decide quickly if it wants to be at the new mall, Mr. London said. He added that a Dillard’s at the new mall probably would mean the chain would pull out of Southwyck.
"With Ward’s going, it puts General Growth in the position of having to step up its activity because it would be in their best interest to scare off anybody thinking of going into that space in Southwyck in order to promote their own new center," Mr. London explained.
Plus, it is not publicly known whether Dillard’s, in its Southwyck lease, has two common provision for mall anchors: a say on which retailer can fill the Ward’s space, and the right to break its lease or pay reduced rent if the Ward’s site isn’t filled quickly.
Southwyck’s owner, Sherman Drieseszun, of Kansas City, Mo., said it is too early to say what can be done about the Montgomery Ward situation. "The bankruptcy court decides what they are going to do," he said. Ward is paying its rent, he added.
Some Southwyck store operators said last week that the loss of Ward won’t be that harsh because the department store hadn’t done well for years.
"There might be some minimal effect, but I honestly think it’s such a strong mall otherwise that it won’t hurt that much," said Linda Markowiak, co-owner of Gordon’s Gifts, a fine-collectibles retailer that has been in Southwyck for decades.
"I can’t imagine that space will stay vacant for very long."
Phil Kajca, co-owner of J. Foster Jewelers in Southwyck, said he hopes the vacancy will allow the mall to bring in a stronger retailer to replace Ward, which had "kind of lost its way."
Many newer malls won’t be hurt when Ward closes over the next four or five months, because the chain has been struggling, Mr. Eichelbaum said. In some malls, however, finding a replacement could be tough, he said.
Few department store chains are expanding. Big-box retailers like Kohl’s, Target, Wal-Mart, and Best Buy are expanding, but they aren’t likely to go into a site like Southwyck because spaces in older malls are hard to retrofit to their size needs, Mr. Eichelbaum said.
But Mr. London said that, although Southwyck has obstacles such as being an older, circular mall design and having an old department store site that soon will be vacated, those problems are fixable.
Galyan’s Trading Co., of Plainfield, Ind., a outdoor sporting goods superstore chain whose co-owners include The Limited and private investors, would be a good fit for that space, he said. Galyan’s has been scouting the Toledo area for store sites, local real estate experts said.
"A large bookstore would do well in there, too," Mr. London said. "You could turn the space over very inexpensively."
But a key question, Mr. London said, is whether Mr. Drieseszun, who owns several midwestern malls, is willing to invest significant capital to revitalize Southwyck to attract a new anchor retailer.
"I don’t think there’s much evidence of him stepping up to the plate and beefing up his centers amenity and merchandise-wise to fend off General Growth," Mr. London said.
Mr. Drieseszun said he cannot do anything until Ward has gone and that filling the space would be easier if he can get control of it through the bankruptcy court.
At North Towne, which has been for sale for two years, the mall owners have no plans to announce.
"There are no immediate changes in store," said Billie Scott, Simon Property spokesman. "We would continue to talk to possible replacement stores for [Ward]."
However, she acknowledged that the company has transformed some malls into strip malls or big-box retail centers. Nothing like that is planned for North Towne, she added.
But the mall at Alexis and Telegraph roads has many vacancies, including the sites of the Elder-Beerman and Dillard’s stores and the National Amusements five-screen theater complex.
J.B. Robinson Jewelers, B. Dalton Bookseller, Payless Shoes, West Coast Airbrush, and Lerner of New York have either left or are in the process of leaving since Christmas. Several others, mostly national chains, are rumored to be leaving when their leases expire.
"It’s kind of scary coming in and wondering who’s going to be closed next," said one North Towne store manager who asked not to be identified.
One store that isn’t leaving is M.C. Sporting Goods, a Grand Rapids, Mich., retailer that renovated its space when it arrived just over a year ago. Besides Ward, it has the mall’s largest occupied site.
"We have no plans to leave the mall," said Bruce Ullery, president and chief executive of M.C. "We have a profitable store and we hope [Simon] can promptly replace the [Montgomery Ward]."
Although industry consultants say it is clear that North Towne’s future is not as a conventional mall, Dave Long of the Toledo commercial real estate firm Zyndorf/Serchuk, Inc., said Simon Property has the resources to buy the vacant store space it doesn’t own, knock the center down, and build a strip center from scratch, getting big-box tenants like Costco or Kohl’s.
"Otherwise, there’s not much future for it as it is," he said. "The existing tenants’ rents are below what the operating expenses are. So the rents are being subsidized by the landlords in some cases. That will only go on for so long."
But the sales associate who handles leasing for Westgate Village Shopping Center said the stores along Alexis Road are starting to do better, enhancing the prospects of a North Towne makeover. Home Depot recently signed a deal to open a store a mile away, and Kroger is in negotiations to put a store nearby. "That’s what the national retailers will come in and look at," he said.
NOTICE: This article, which may be copyrighted, is reprinted with specific permission granted to Heidelberg College. Further reprint rights must be secured from the publisher.
Heidelberg College / Office of College
Relations / webmaster@heidelberg.edu