Covered malls, such as Indian River Mall, are an old formula that needs updating to attract current customers.
It’s no longer enough – if it ever was, since Indian River Mall never earned back its initial investment – to offer a cocooned, air-conditioned bubble with some nice shops scattered among anchor stores with a food court for dining and socializing and a movie theater for added entertainment to boost the mall’s draw.
It’s been about a year and a half since Simon Property Group stopped paying on its $71 million mortgage with Wells Fargo Bank, which included both Indian River Mall and Indian River Commons next door. Wells Fargo foreclosed on both properties, offering them up at $35 million in an online auction in May 2015 that brought no bidders, forcing it to remain the owner. Recently, however, Indian River Commons sold for $16 million to an Illinois company, DTS.
Simon – one of the biggest mall owners in the country, with 108 malls and 71 premium outlets in 37 states – built the shopping center in 1996 at a cost of $71 million, but its county-assessed value has never approached that, $48 million in 2006 being its high-water mark. Now it’s assessed at less than half that, at $21.8 million.
After the failed auction, Wells Fargo hired C-111 Asset Management, which in turn hired Bayer Properties to market and manage Indian River Mall. Bayer would not comment on store turnover at the mall but it appears to have held the line on further flight of businesses. Twenty-five of 80 storefronts were vacant a year ago, the same number empty now.
Lambert Commercial real estate broker Billy Moss is marketing Indian River Mall, which “like malls all over the country, is struggling.
“Malls have to reinvent themselves. Retail itself is a challenge with the Internet,” Moss said. “People are buying online from home. They have sacrificed personal attention for convenience.”
One solution for getting people off their computers and into their cars and to the mall is to lure them with entertainment, which includes “destination restaurants,” Moss said, which is what he is focusing on.
The mall has one bigger restaurant, Friday’s, but a second main restaurant space is vacant.
“There’s a lot of interest right now,” Moss said. “In newer malls, food courts are out. Individual restaurants are renting out store space.”
Bowling alleys, laser tag and children’s activities are other entertainments Moss said malls are bringing in to attract customers.
Over the past year, Indian River Mall has participated in that trend, offering a regular Family Friday Fun Night along with other social and educational activities, including a health fair, several walking-for-a-cause events and a green energy exhibit. Coming up June 18 is Hurricane Expo 2016, which will feature vendors with products and services related to storm preparedness and safety.
The central public space where people gather has not only become the event-entertainment marketing focus for older covered malls, but also the sweet spot for sales. “You’ll see kiosks doing well and the endcap [store locations] are vacant,” Moss said.
A recent walk-through of the Indian River Mall bears this out. Six corner-store sites on main and side corridors were empty.
The mall’s anchor stores – JC Penney, Dillard’s, Sears and Macy’s – own their own spaces and were not part of the bank foreclosure action, and at least one of the anchor stores, JC Penney, has not been affected by the overall mall’s malaise.
“We’ve had two really good years,” Penney’s General Manager Charles Nardi said.
The store will open a Sephora store-within-the-store location this month to further boost sales, Nardi said. Sephora is the leading chain of perfume and cosmetics stores in France. It expanded to the U.S. in 1999 and has partnered with Penney’s. Nardi said people have been asking for a Sephora at the mall for years.
As part of its push to attract more customers, Bayer Properties has spiffed up the mall. It forwarded a PowerPoint presentation showing renewed signage, refreshed landscaping, new lighting, new front-entrance sliding doors and a patched and repainted parking lot.
In a statement issued to the paper, Bayer suggested the added events and cosmetic fixes were the catalyst that spurred recent investments at the mall. “The positive response from our customers has resulted in several additions: Disney and Sephora opening in JC Penney, Talbots recently completed a renovation, and four anchors – Macy’s, Dillard’s, JC Penney and Sears – continue to serve our community.”
But no major renovations – ones that would require building permits – have been undertaken and the store count remains static. The last building permit was pulled two years ago.
Wells Fargo is unlikely to make a major investment to attract a buyer or to turn the lethargic mall around. “Banks do not want to be in the real estate business,” said Wayne Bibeau, the county’s commercial property appraiser. “New build-outs by the owner won’t be happening.”
Which means, in all likelihood, the mall needs to be sold before it will see significant upgrades.
