Cincinnati malls' death spiral: Will yours survive? - Cincinnati News, FOX19-WXIX TV

Cincinnati malls' death spiral: Will yours survive?

Kenwood Town Centre is one of many malls in the tri-state area facing challenges. (Provided, Cincinnati Enquirer) Kenwood Town Centre is one of many malls in the tri-state area facing challenges. (Provided, Cincinnati Enquirer)

Two decades ago, newly minted teacher Stacy Recker fell in love with Kenwood Towne Centre.

“It’s the most beautiful mall ever,” she recalls. “Plus, you’re in your early 20s, so you need a lot of stuff.”

Today, the Columbia Tusculum resident does most of her shopping on Amazon.com or at Rookwood Commons, the open-air shopping center in Norwood.

“I like Nordstrom Rack more than Nordstrom,” Recker says. Nordstrom Rack, at Rookwood, is the off-price sibling of the department store that anchors the Kenwood mall.

The changes in Recker's shopping habits reflect the challenges malls are facing in Cincinnati and across the country: a preference for off-price stores over traditional department stores and an embrace of convenience vs. being trapped in a massive indoor maze.

All but two or three malls in the Greater Cincinnati/Northern Kentucky area could fail, according to our partners at the Cincinnati Enquirer.

For some malls, the challenges will be too much. Up to a quarter of the 1,100 malls nationwide will close in the next five years, industry expert Christian Buss of Credit Suisse predicted in a recent report.

All but two or three malls in the Greater Cincinnati/Northern Kentucky area could fail, according to our partners at the Cincinnati Enquirer.

The carnage could be even worse in Cincinnati and Northern Kentucky, according to two local experts in retail real estate. One mall – Forest Fair Village – is already essentially dead, and three of the five others are vulnerable. 

“The bottom line is you’re going to end up with two,” says John Heekin, co-founder of Downtown-based Source 3 Development. “Northgate and Tri-County are in some version of a death spiral.”

Charles Townsend, president of Anchor Associates in Norwood, puts the number of survivors at “two or possibly three.” 

Eastgate Mall is vulnerable, but its smaller size is an advantage in an era of smaller stores.

“The strong are going to get stronger and the weak are going to go away,” Townsend says.

Department stores, which used to drive mall traffic, have seen their retail market share drop from 45 percent in 2007 to 35 percent in 2015, according to Buss’ May report. They've lost shoppers to specialty and off-price stores that often locate in open-air shopping centers, including those such as Rookwood known as "lifestyle centers."

Brick-and-mortar department stores also have lost out to online shopping, which is expected to continue skyrocketing. E-commerce accounts for 17 percent of sales now and is headed toward 35 percent-plus, Buss is predicting. 

As their sales have slumped, Macy’s, Sears and J.C. Penney have announced mass store closings, creating more problems for the struggling malls to which they're attached. The department store chains often own the anchor boxes they occupy in malls and are slow to sell or lease them when they move out, leaving space that's not only unproductive but an eyesore.

Here’s where the region’s malls stand.

Kenwood Towne Centre, Sycamore Township, 1,150,000 square feet: Despite Recker’s defection, Kenwood remains Greater Cincinnati’s top mall, and its central location puts it in a good position to keep that title. Proximity to the wealthiest community in Ohio – Indian Hill – doesn’t hurt, either.

“Kenwood remains a star in the country,” Heekin says.

A single tenant gives the mall another big advantage: The Apple Store is such a customer draw that it raises other stores’ sales 10 percent in the malls it enters, Green Street Advisors found in 2015. Kenwood is the only mall in the region that has one.

Like any other mall, Kenwood does lose tenants. Fossil and Gap are two that have pulled out recently.

But Kenwood is notable for its mix of retail, including some shops that are unique in a multistate area. Tenant Fabletics by Kate Hudson actually began life as an online-only retailer.

It has a Macy's and Dillard's in addition to the only traditional Nordstrom in the region.

Florence Mall, Florence, 890,000 square feet: Northern Kentucky’s only mall should be in good shape, the experts say – largely because it is Northern Kentucky’s only mall.

Florence Mall is a “regional phenomenon,” Heekin says, with a customer base that stretches through a wide swath of suburban and even rural Kentucky toward Louisville and Lexington.

Nipping at its heels, though, is Crestview Hills Town Center just east off of Interstate 275 in Northern Kentucky. Like Rookwood, it’s a lifestyle center. Such shopping centers are typically smaller than a mall and don’t provide protection from the elements. However, they’ve proved popular with shoppers who like being able to go straight to the store they’re seeking.

Crestview Hills has a Dillard's, while Florence Mall has a Macy's, Sears and J.C. Penney.

Eastgate Mall, Clermont County’s Union Township, 920,000 square feet: The conversion of one anchor box into a Dillard’s clearance center has made the mall a draw for bargain-hunting shoppers. However, Eastgate has a number of vacancies, and one store – Eutopia – posted a sign in June saying it would be closed for the whole month.

The mall has three anchors – Kohl's, J.C. Penney and Sears – but is taking a proactive approach to reducing its reliance on one of them. Mall owner CBL & Associates has bought Sears' Eastgate property and is leasing it back to the department store giant, says Sarah Enlow, mall marketing director. There’s no timetable for Sears to leave, she said, but CBL is developing several “redevelopment scenarios,” including different retail and dining options, so the company is ready when it happens.

“I think some of the negativity around the retail industry is overblown,” Enlow says, adding that the departure of some tenants creates space for new stores and concepts.

Northgate Mall, Colerain Township, 1,100,000 square feet: Four years ago, Northgate was reborn. Retailers commonly seen in strip centers – including Marshalls, DSW and Ulta – replaced departed department anchors. The stores were oriented to be more outward-facing, like those in a lifestyle center, with some having no mall entrance at all. 

“It has essentially been ‘demalled’ already,” Townsend says.

But despite the mall's best efforts, the hits keep coming. HHGregg, which was part of the redevelopment, closed earlier this year. Northgate has at least half a dozen vacant spots in one wing alone.

Smaller retailers that once may have attracted shoppers to the mall – stores like Old Navy, Lane Bryant and Cacique – have instead located just north at Stone Creek Towne Center. Yup, it’s another lifestyle center. Northgate still has a Macy's and a Sears.

Tri-County Mall, Springdale, 1,280,000 square feet. Seventeen minutes east of Northgate on Interstate 275, Tri-County is attempting its own rebirth. A store directory for the second-largest of the Greater Cincinnati/Northern Kentucky region’s malls optimistically splashes the words “coming soon” across the space Dillard’s left to move north to Liberty Center.

Tri-County has been talking about a $30 million redevelopment for three years, but little has actually changed except for the Men's Wearhouse's move from the mall into an outlot. Still, Marketing Director Natalia Yaacob said in an email that the mall is "aggressively" working on its plan "to transform the shopping mall into a mixed-use center that will focus on the shopper experience beyond simply retail. Once pending deals are finalized, we will be excited to share them with the public."

Right now, much of Tri-County's lower level is vacant, along with almost half of the food court spaces. The mall has two parking garages, one with four levels, a Sears and a Macy’s.

“It’s a difficult piece of real estate,” Heekin says.

Forest Fair Village, 1,940,000 square feet, Fairfield and Forest Park: The 28-year-old mall variously known as Cincinnati Mall, Cincinnati Mills and Forest Fair is nearing its end as a retail destination.

Kohl’s, Babies "R" Us and Bass Pro Shopsstill occupy three anchor spots, and a children's activity center is open near Entry No. 2. And that’s about it. Only a few people – some with young kids, one with a camera – are wandering the sunlit, air-conditioned corridors on a recent hot weekend.

The 90-acre site, including the building, a garage and a parking lot, is for sale, with an asking price of $55 million, says John Thompson of Newmark Grubb Knight Frank, which represents the owner.

“As we market this property, we are really marketing it for uses other than retail,” he says, conceding it “has probably not got a great retail future.”

Babies "R" Us and Bass Pro are on short-term leases, Thompson says. Bass Pro is in the process of merging with Cabela's, which also has a store nearby in West Chester.

Possible uses and users include light industrial, movie and TV production, sports, educational, residential, high-tech manufacturing, business incubators and government.

Or really, anyone who could use a nearly 2 million-square-foot building with all the amenities – utilities, streets, parking – in the heart of the Midwest.

This report was published by Cindi Andrews, Cincinnati Enquirer. 

Powered by Frankly