RACINE — How to reinvigorate a struggling mall? It’s not cheap or easy.
Whether a mall experiencing tough times can have a long-term future is a case-by-case question, said International Council of Shopping Centers spokesman Jesse Tron.
Demographics of an area play a large part in predicting a mall’s future, he said. And the Racine area certainly is less affluent than some of the suburban Milwaukee areas where malls such as Bayshore and Mayfair draw from.
But Tron said even a working-class area can support mall retail if there is no major shift such as a large population loss.
“It really comes down to: Is there enough demographic viability?” he said. “One significant (new) retailer can turn things around quite a bit.”
Finance Professor and real estate expert Mark Eppli at Marquette University said a shopping mall is a “quasi-public space.” As such, the municipality has incentive to keep it healthy because it can serve as a town center.
In November, when J.C. Penney announced it would close its store at Regency Mall, Mayor John Dickert said city officials had talked with former mall manager Curt Pruitt about the possibility of evaluating the entire mall design: “the look and feel of the mall and whether it’s time for a new, higher-energy look,” such as when Bayshore Mall in Glendale became Bayshore Town Center.
“It really is up to the owners of the (Penney space) and mall to have that conversation with us,” Dickert said then.
Asked last week if Regency Mall owner CBL & Associates has any plans to remake the mall, Regional Director of Marketing Sean Phillips replied, “We do have (lease) deals in the works for several of the spaces that are vacant,” including with big-box retailers.
Raze the roof
Big investment — the Bayshore project cost more than $400 million — demands big returns in rent, Eppli said. For example, if you have $100 million in construction costs and need a 10 percent return, “You need $10 million in rent.”
A worst-case scenario for a descending mall, Eppli said, would be to convert a vacant anchor to a call center, thus using a former store as office space.
“But that takes it completely out of the public domain,” he said.
In some cases, Tron said, malls have removed part of the roof to create a courtyard and indoor-outdoor area for restaurants and coffee shops with a “town center” atmosphere. Stamford, Connecticut, has such a mall, he said.
“They still do pretty well in the winter, because they have indoor seating, too,” he said.
But, Tron acknowledged, “it’s work” to improve a mall.