In 1970, the Youngstown based Edward J. DeBartolo Corporation opened the Southern Park Mall. The Boardman mall, which will be celebrating its 50th anniversary in 2020, is now owned by Columbus based Washington Prime Group (WPG). The publicly traded REIT
[WPG – Yahoo Finance] considers the Southern Park Mall a Tier I asset for the company.
Closings of Sears and Dillard’s
The Southern Park Mall features 1,198,000 square feet of space. Of that total space, there are four large anchor spaces which for much of the new millennium were occupied by JCPenney, Macy’s, Dillard’s, and Sears. However that all changed in July 2018 when Sears closed their Boardman location.
The closure of Sears [SDLDQ – Yahoo Finance] was not unexpected due to their struggling financials and ever-growing number of closures across the county. Sears itself has closed 260 of its roughly 700 stores according to CNBC. The future of the 133 year old company remains in jeopardy as it looks to rebound after entering Chapter 11 bankruptcy.
A day after the announcement of the closure (April 6, 2018) of the store, WPG released the following statement, “The Company is in discussions with new tenants, which will be announced in the future, for the high visibility anchor space currently occupied by Sears. The Company proactively negotiated an early termination of the lease to gain control of the real estate and commence redevelopment efforts.” As of today, WPG has not made any announcements regarding the future of this particular location. However, in an interview with WKBN, Southern Park Mall General Manager Brian Gabbert stated, “That could be anything from using the store that’s there to actually tearing it down and putting other stores in place on the outside and redeveloping the portion of the lot beyond that as well.”
Less than 9 months later, on February 13, 2019, Dillard’s, Inc. [DDS – Yahoo Finance] announced the closure of their location at the Southern Park Mall. What is interesting about this closure is the fact it was the only store closing announced by Dillard’s thus far in 2019. Furthermore, their stock is trading at $67.21 as of the close on May 7, 2019 and the company had net income of $170 million for their fiscal year which ended on January 31, 2019. The company released the following statement, “Following the announcement to store associates at Southern Park Mall this morning, we are confirming the upcoming closure of the location. The store is expected to close no later than May 14, 2019. Including Southern Park Mall, Dillard’s currently operates 14 locations in Ohio.” The release stops short of mentioning the performance of the store, but this closure, coupled with the fact they converted their Eastwood Mall location in Niles to an outlet store, may signal the company does not view the Mahoning Valley’s changing demographics favorably and are not where they need to be for the markets they serve.
Local Mall Developer (and WPG Competitor) Cafaro Purchases Dillard’s Building
What complicates this situation is the fact a newly formed entity affiliated with the Niles based mall developer Cafaro Co. purchased the Dillard’s building at the Southern Park Mall. Upon review of the Mahoning County Auditor website, the Dillard’s building, coupled with the parking lot across the street on California Avenue, were separate parcels owned by a subsidiary of Dillard’s. The rest of the Southern Park Mall complex is owned by Washington Prime Group. Thus, there are now two competing mall developers that have a stake in the future of the mall. Cafaro Co. spokeman Joe Bell said, “We learned quite a while back that Dillard’s was interested in closing that particular store location. So, our executives inquired about it and saw this as an opportunity to perhaps redevelop and revitalize that side of the mall. We are looking forward to working with the mall ownership to do this.” In an article from the Youngstown Business Journal just last week, Joe Bell went on to say, “Right now, we’re very far from a determination of how we’re going to use that space.”
When Cafaro announced the purchase of the building, people on social media were wondering if the local mall developer was looking to purchase this competing facility, or whether they purchased the Dillard’s building in an effort to keep Dillard’s, or perhaps expand Dillard’s presence, out at the Eastwood Mall. Time will certainly tell, but it will be interesting to see if the Cafaro Co. has any success in landing a tenant or tenants in what I viewed as one of the most well maintained stores at the Southern Park Mall.
Redevelopment Efforts at Other Malls
As bad of a picture as this news paints the facility, the Southern Park Mall is not the only mall facing similar difficulties. According to the WPG 1st quarter 2019 financial results, the company faced 22 department store vacancies in their Tier I and Open Air properties. In the 1st quarter alone, WPG stated they were able to address 11 of the 22 vacancies. The vacancies were filled by unnamed national home furnishing, off-price, and sporting goods retailers, as well as named retailers such as Dunham’s Sports, The RoomPlace, and Round1 Entertainment. In a transcript of their 1st quarter earnings call, WPG CEO Lou Conforti did mention Southern Park at one point, but did not dive into details. Here was the exchange between Conforti and Melissa Indest, WPG Executive VP of Finance.
Louis G. Conforti, Washington Prime Group Inc. – CEO & Director Transcript of WPG earnings conference call presentation 4/25/2019
… And you mentioned Southern Park, I’m champing at the bit to — and Lisa just gave me the — she gave me the evil eye.
Melissa A. Indest, Washington Prime Group Inc. – Executive VP of Finance & CAO 
Next quarter or two.
Louis G. Conforti, Washington Prime Group Inc. – CEO & Director 
She gave me — a quarter or two, okay. So Mark?
Since Conforti did not have an opportunity to elaborate, one could only speculate that within the next quarter or two we may have a better idea of WPG’s plans for redevelopment at the Southern Park Mall?
Cafaro has also had success in their redevelopment efforts for their properties. At the Erie, PA Mill Creek Mall, Round1 Entertainment replaced the former Burlington Coat Factory location, while Boscov’s, a regional department store that some compare to a Macy’s, recently replaced Sears at the complex. Cafaro has also had success landing some new tenants at their Paducah, KY facility, the Kentucky Oaks Mall. The company recently announced HomeGoods would be coming to the complex, joining Burlington and Ross Dress for Less as new tenants in 2019.
Vindicator Sneak Peek
In the April 28, 2019 edition of the Vindicator, Jessica Hardin wrote a front page column entitled Fall of the Mall and the New Vision. In this feature article, Ms. Hardin had an opportunity to speak directly with management from WPG on their plans for the redevelopment of the Southern Park Mall. The article showcased renderings, which as is noted in the caption from The Vindicator below, are illustrative only and are meant to show the potential redevelopment opportunities of SPM and are not indicative of the final project.
The renderings show the Sears building being torn down and being replaced by green space for community events, as well as some newer stores/restaurants built in the front portion of the mall just to the south of the current food court. WPM has not officially announced their intentions for the former Sears building, so it will be interesting to see if they do opt for tearing down the anchor building, or whether they are able to find a replacement for it.
The Vindicator article takes a dive into two other WPG facilities in Columbus (Polaris) and Mentor (Great Lakes Mall) and some redevelopment efforts that have worked in those two facilities. I would encourage you to check out the article to hear more about WPG’s vision for Southern Park.
The Next 50 Years
In this day and age with Amazon and e-commerce sales growing rapidly year-over-year, some argue that shopping malls are the way of the past. I tend to think brick and mortar retail is right-sizing to the new demands of customers shopping preferences. I think there will always be a place for brick and mortar retail, but the composition of the shopping mall of the past will have to reinvent itself in order to survive. Malls with combinations of retail, restaurants, lodging, entertainment, events, as well as business and residential spaces could be the means of the future. WPG loves using the terminology town center, and those elements truly embody that line of thought.
In a statement back in March, WPG CEO Lou Conforti said, “Our promise is that we will make Southern Park Mall as dynamic as ever and maintain its longstanding presence as a gathering place to shop, play, eat and drink. We are in active planning and negotiations for redevelopment alternatives, including new entertainment and dining options, as well as local, regional and national tenancy, which provides differentiated goods and services.”
Time will certainly tell whether WPG will, as the old adage says, put their money where their mouth is when it comes to all of the statements throughout this article, but one thing I do find encouraging is how much attention and focus WPG has placed on the Southern Park Mall in the past few months. CEO Lou Conforti requested a March meeting with the Boardman Township Trustees to discuss his plans for the mall with upper level management from WPG, Conforti took a tour of the mall and discussed changes he felt were necessary for the facility with The Vindicator, and then just last month, Jessica Hardin of The Vindicator was given exclusive access to discuss the future of the facility in greater depth with the company.
A lot of people in the Mahoning Valley had concerns, rightfully so, as to the future of this facility with the closings of Sears and Dillard’s in the past year. However I think the Mahoning Valley is on the radar screen of WPG management now more than ever. As the Southern Park Mall enters its 50th anniversary in 2020, let’s hope WPG comes through when it is needed the most and invests the necessary time and money to make SPM the Tier I property that not only the company can be proud of and showcase, but one that we in the Mahoning Valley can embrace and support for the next 50 years.
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