Turbulent times for shopping malls

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The Citadel and Chapel Hills malls have been buffeted by a shopping bag full of changes since the recession and even before.

The loss of tenants large and small, trips to bankruptcy court by parent companies, new management and new competitors have all combined to make life for the malls tumultuous.

How can they expect to survive, let alone thrive, given their many challenges?

For The Citadel, the biggest threat may be something over which it has no control:

its surrounding neighborhoods have not aged well.

The city’s oldest mall, built east of downtown in the early 1970s, sits in the middle of a deteriorating Academy Boulevard retail corridor. The average surrounding household income is $53,000 a year, which doesn’t leave much discretionary income for a family of any size.

The mall’s management says its occupancy rate is 90 percent, which sounds good. But that figure was near 100 percent before the recession. It also doesn’t take into account a still-empty former Macy’s that once helped generate traffic for the mall.

Vacant sites once inhabited by Krispy Kreme, Red Robin and Talbott’s also serve as reminders of better days.

Average household incomes around the Chapel Hills mall, which was built in the early 1980s, remain healthy at about $84,000 a year. But it faces huge pressures, too.

For a time, the mall was the only game on the north side of town. No longer. It now has to deal with competition from the newer Shops at Briargate, Monument Marketplace, the Outlet Shops at Castle Rock and even south Denver’s Park Meadows Mall.

Despite the increasingly tougher climate, both malls are retooling and doing all they can to stay competitive.

The Citadel, now in the hands of new management company Urban Retail Properties, is in the midst of what it hopes will be a retail rebirth.

It needs it. Many of its tenants are gone including an Old Navy and a Steve & Barry’s, and many who remain cater to a lower-income demographic.

A number of changes, however, are expected soon.

“Urban Retail has only been involved in the management aspect for a few weeks now and at this point all opportunities are being explored,” said Lisa Bell, a senior VP at the Chicago company.

Not that the mall has been sitting idly by until now.

A popular Verizon retail kiosk has been moved, front and center, near the food court in a location once used by the owners as a customer service desk.

Near the black-lit-and-neon Glow Golf store on the lower level colorful new entertainment kiosks are now in place to attract teens, along with a mini-carousel for younger kids.

A former temporary bumper-car operation that had opened in a 40,000-square-foot vacated Steve & Barry store has now been cleaned up. Part of the space is now a Halloween Boutique, though, by its nature, that space is open for a limited time each fall.

More indications of progress came earlier this month from ICA Properties of Odessa, Texas, which announced it had purchased The Citadel’s former Macy’s store for $3 million and plans to introduce new stores to the market.

Urban Retail won’t say exactly what it has in mind but is known for clustering tenants in its mall to drive foot traffic and keep shop focused on the most active parts of the mall.

“Retail goes through many cycles, and we are prepared to work closely with (the owners) to make adjustments to remain a key destination in the Colorado Springs market,” Bell said.

Whether that pans out remains to be seen, but Pet City manager Bree Maestas, whose family business has been a tenant at The Citadel since it opened in the 1970s, remains optimistic.

“We’ve moved three different times, all within the mall. It’s awesome here — and our business is good. Even with the change in ownership, the management team has done a great job to make the stores successful,” Maestas said.

Marlene Enlarde looked at several options before selecting The Citadel for her new store, Dead Sea Secrets.

“This is close to where I live. It’s also close to Fort Carson where I sometimes have a kiosk. I sell skin care products and accessories from Israel and other countries. I just like the layout, the feel of this mall better than the other one further north. It’s easy to access — I wouldn’t consider anywhere else,” she said.

At the Chapel Hills mall, General Manager David Moss also is in the hunt for new tenants and expects to add several new ones by this fall, including a children’s retailer that will be new to the market.

In order to build awareness for the mall’s many retailers, the mall just held a “Shop Til’ You Rock” weekend extravaganza with live music, giveaways and contests geared to back-to-school family shoppers.

“It was one of our best ever,” Moss said.

General Growth Regional Vice President Barry O’Connor is confident about the mall’s future.

“Trends come and go. Every so often you hear that ‘malls are dead.’ Lifestyles (centers like the Promenade Shops at Briargate) were big during the last five years, but there was so much overbuilding that many are now going out of business,” he said.

Mall merchants seem pleased with the management’s marketing strategies.

Dustin Haworth’s family has owned the Chapel Hills Pet City store since the mid-1980s. He said he’s never considered moving to a “power” or neighborhood shopping center, even with higher mall rents.

“Being in a busy place is key for me and other retailers. When the mall does an event — and they do quite a few — it helps us all,” he said. “This year is slow so far, but I plan to stay put.”

That said, he said he also plans to do some negotiating to make sure his rents stay within reason.

Tenant concessions on rent and other costs are a fairly common issue for landlords, making it more difficult for them to maintain cash flow and keep their malls looking good.

Moss said he’s anxious to begin some landscaping and facility upgrades now that the owner of the mall, General Growth Properties, has emerged from Chapter 11 reorganization. It did so in June with the help of a Texas pension fund that took an ownership stake in exchange for a cash infusion.

Midwest Mall Properties, whose ownership faces debt in excess of $250 million on three centers including the Citadel mall, is working with its lenders and Urban Retail to forestall further financial woes.

In the final analysis, however, it’s the shopper who decides the fate of any given retail destination.

“I go to Wal-Mart and Target, too, but when I want to go to multiple stores, I like The Citadel’s ambience. It’s more appealing,” said Kim Marion, as she walked into the Sears store last week at the Chapel Hills Mall. “I like this mall too, but I wasn’t crazy about it having K-Mart as an anchor.”

That K-Mart is long gone, actually.

Pikes Peak region super regional malls

Colorado Springs’ two malls appeal to two very different markets. Most frequent shoppers at the Chapel Hills mall are teens and their families. The Citadel tends to attract more military families and an older shopper demographic.

Chapel Hills Mall

Size: 1.2 million square feet

Opened: 1982

Expanded: 1985

Renovated: 1998

Anchors: Dillard’s, JC Penney, Macy’s, Dick’s Sporting Goods, Burlington Coat Factory, Sears.

Average sales per square foot: $350+

No. of stores: 155+

Occupancy: 88 percent

Average household income: $84,214

General Manager: David Moss

Owner: General Growth Properties Inc., Chicago.

The Citadel

Size: 1.1 million square feet

Opened: 1973

Renovated: 1995

Anchors: Dillard’s, JC Penney, Burlington Coat Factory, Sportman’s Warehouse.

Average sales per square foot: Would not disclose

No. of stores: 150

Occupancy: 90 percent

Average household income: $53,211

Senior property manager: Victoria Harley

Management: Urban Retail Properties Inc., Chicago.

Owner: Midwest Mall Properties, Ark.