Now that Macy’s has announced it will close, what’s next for the Honey Creek Mall in Terre Haute?
While its too early for mall owner CBL Properties to announce plans, filling large square footage spaces left vacant after an anchor store pulls out is not new.
“The examples vary based on the market, but we believe that recapturing an anchor store space gives us the opportunity to bring in new and exciting uses that transform the property and drive sales, traffic, and growth to the entire center,” said Stacey Keating, director of corporate communications for CBL Properties.
“Since 2013, CBL has completed, or has underway, over 28 anchor redevelopment projects. CBL has also been proactive in recapturing under-performing anchor locations for future redevelopment. In January of last year, we announced the purchase of five Sears stores and three Macy’s,” Keating said.
Macy’s, Inc. last week announced that its store in Honey Creek Mall will close in mid-March as part of a continuation of closures announced last summer. It was the only store in Indiana or Illinois to be included in Macy’s latest round of store closures.
Retail store closures are not predicted to slow in the upcoming year.
Businessinsider.com this month reports that more than 12,000 stores are expected to close in 2018. That’s up from roughly 9,000 from last year, according to Cushman & Wakefield, a leading commercial, international real estate broker.
“The Midwest is not alone, but is sure on the forefront of retail challenges,” Marshal Cohen, said nationally known expert on consumer behavior and the retail industry who serves as chief industry adviser of The NPD Group Inc. NPD Group is a market research company based in Port Washington, NY.
“As online sales grow they clearly come at the expense of stores. After all, if you buy a sweater online you, (then you) don’t need to run to a store to buy another. Stores are looking at a rebound of sorts over the next few years, but that doesn’t mean all stores,” Cohen said.
New mall strategies
However, Cohen noted, “Malls are finding new ways to engage with consumers in those empty spaces. Movies, restaurants, spas, and health clubs are part of the solution. Redesigning the mall is another. Some malls are creating new space by shrinking the mall, and building lifestyle spaces – community centers and parks. Anything to drive traffic to them.”
That’s precisely what CBL Properties has done, the company said.
“We do not take a cookie-cutter approach to our redevelopment projects,” Keating said. “Each project varies by market and considers a number of factors.
Some recent CBL Properties redevelopment examples include:
• York Galleria (York, PA): former JCPenney converted into a Gold’s Gym and H&M
• Janesville Mall (Janesville, WI): former JCPenney converted into ULTA Beauty and DICK’S Sporting Goods
• Eastland Mall (Bloomington, IL): former JCPenney location will be converted into an H&M and Planet Fitness (this plan was announced Jan. 4)
• CoolSprings Galleria (Nashville, TN): Sears store was converted into a dining, entertainment and retail destination that included American Girl, Kings Bowling and Entertainment, H&M and several restaurants
Retail, Keating said, is certainly evolving at a rapid pace as consumer preferences change.
“Retailers and shopping center owners, like CBL, are evolving along with it,” Keating said. “We are working diligently to diversify the offerings at our properties to include more non-traditional uses that include dining, entertainment, health/wellness, beauty, and in some cases office, multi-family and hotels. There will always be retailers that adapt well and continue to thrive and others that don’t, but that’s always been the case.”
Any effort to replace Macy’s with business activity at the Honey Creek Mall is seen as a positive, said David Haynes, president of Terre Haute Chamber of Commerce.
“The Honey Creek Mall has and will continue to have the support of the Chamber. The mall is a great asset to our business community and we look forward to watching the reinvention of the property,” Haynes said.
Not all gloom
While stores are closing nationwide, it’s not all gloom and doom for retail this year.
Retailtouchpoints.com reports the number of projected retail closings for 2018 represents a small number of retail merchants.
“While this sounds grim on the surface, it is important to recognize that the anticipated closures signal that retail will continue to undergo a transformation, rather than an apocalypse,” according to Retailtouchpoints.com. “Six retailers accounted for 3,658 [52 percent] of the 6,985 closures [in 2017]. That’s an indication that despite scary headlines, only a small fraction of merchants are responsible for most closures,” according to the online report.
The Moody’s 2018 Retail Outlook expects a stable outlook for the U.S. retail sector “reflective of modestly higher operating income and sales growth,” according to Moody’s Investor Service 2018 outlook for U.S. retail, apparel, and restaurants.
Moody’s predicts sales losses at department stores will slow to 1.3 percent this year, while operating income losses will be reduced to 2.7 percent, excluding Sears. Moody’s expects operating income and sales growth to grow 3.5 percent to 4.5 percent in 2018.
Paul Thrift, president of Thompson Thrift Development in Terre Haute, said retail has been changing for decades.
“We are in the midst of a paradigm shift in retail across the country. Over the past four or five decades, we have witnessed an evolution of the concentration of retail sales from downtown, to the mall, to large box power centers, lifestyle centers and we are now seeing another dynamic shift in the face of retail,” Thrift said in an email in response to the Tribune-Star.
“I believe that this transition will ultimately be a healthy thing, however the transition will be messy and there will be winners and losers. As consumers determine how they will balance on-line purchases with bricks and mortar retail, the industry is going to continue to adjust and right size. For those of us in the retail real estate industry, it is an interesting time and we are excited to work to take advantage of the opportunity that the shift in the market creates,” Thompson said.
Reporter Dave Taylor (email@example.com) also contributed to this report.