RICHMOND HEIGHTS, Ohio – From outward appearances, Richmond Town Square seems to be a mall in decline. The former Macy’s store facing Richmond Road remains empty nearly two years after it closed, and the nearby Sears has announced it, too, is leaving on March 26.
Half of the spaces in the food court are empty, and the busiest tenant is the Regal Richmond Town Square Stadium 20.
But Mike Kohan, president of the Kohan Retail Investment Group that bought the property on Nov. 10 for $7.25 million, says it’s unfair to judge the entire mall based on decisions made by faraway retailers that are shuttering stores nationwide. His 850,000-square property doesn’t include the two-story Sears or Macy’s stores or surrounding parking lots; those are owned by the stores.
Kohan, which also bought Chapel Hill Mall in Akron last year, envisions aging malls as potential community gathering places that go well beyond big-box retail. He said he is talking to major national retailers as well as small businesses and nontraditional tenants such as family entertainment centers.
Although some brick-and-mortar stores slumped this past holiday season, and mall-based retailers like Macy’s, Sears, and Kmart are closing more than the usual number of stores, that doesn’t mean that shopping centers themselves are doomed.
“Malls aren’t dead at all,” said Steven Dennis, president and founder of SageBerry Consulting, a retail strategy consulting firm in Dallas, and a former retail executive with Neiman Marcus and Sears Holdings. “There are plenty of really good malls and plenty of retailers opening new stores.”
For all the talk of how much shoppers have migrated online, “90 percent of retail is still done in physical stores, and that’s only changing about 1 percent a year,” he said. “There clearly needs to be fewer physical stores, but five years from now, 85 percent of sales will still be in stores.”
He pointed to the fact that both off-price retailers such as TJ Maxx and the dollar stores are thriving, as well as more exclusive brands such as Nordstrom and Saks Fifth Avenue.
“Where you see the biggest declines are in the middle: Macy’s, Penney’s, and Sears,” he said. While high-end stores attract shoppers by selling must-have items that are hard to find online, many department stores tend to have the same kinds of products and compete for who can offer the lowest price, he said.
“That’s been an issue for a long time. We were complaining about how intense the promotional environment had become 15 to 20 years ago.” Now that smart phones let shoppers instantly compare prices among several stores, and internet retailers frequently offer free shipping, it’s become even harder for stores that don’t offer something unique.
Dennis said it’s the same way with malls: The ones that are in affluent suburbs and have desirable retailers that shoppers are willing to drive across town to shop at, “those malls will be fine.” Those might include places like Beachwood Place, Crocker Park, and First & Main in Hudson.
But for the malls that opened in great locations 30 or 40 years ago but are now surrounded by working class neighborhoods with less spending power, losing one or two anchor stores can be devastating.
“I definitely expect the pace of all closings to accelerate,” Dennis said. “But I don’t think Penney’s or Macy’s are going away. They’ll just be consolidating” and selling out of fewer stores.
The increased competition has been especially brutal on Sears, which last month announced yet another round of store closures as well as sold its signature Craftsman brand for $775 million.
“I think Sears is just basically liquidating,” Dennis said. “They’ve been in very significant decline for close to 15 years now, their operating losses have been horrible, and they’re just selling off anything of value.”
But rather than see Sears’ departure as bad for the malls, Dennis said it could be an opportunity to use that space for something better. “Sears already isn’t a big traffic driver in the mall,” he said. “I’m aware of quite a few malls that would love to have Sears leave, and give the mall operator a chance to put in another store. If you’re in a mall with Nordstrom, Macy’s, Penney’s, and Sears, Sears leaving will only help Penney’s.”
Talking about the future of Richmond Town Square:
The Richmond Heights Planning Commission is having a public meeting at 7 p.m. Feb. 8 to talk about other possible uses for Richmond Town Square. The meeting will be at City Hall, 26789 Highland Road.
Call the Richmond Heights Building Department at 216-383-6312.
The 1 million square foot Richmond Town Square, at 691 Richmond Road at the northeast corner of Richmond and Wilson Mills Road in Richmond Heights, was built in 1966 and extensively expanded and renovated in 1999.
“The theater is still successful, and so is the furniture store, and Planet Fitness,” said Philip Seyboldt, the building, zoning, and housing commissioner for the City of Richmond Heights. JCPenney is the only remaining retail anchor. He said city officials believed their Sears was less likelty to close, because it was the only one on the East Side of Cleveland.
“We’re asking for input from the public on what types of uses may be compatible with a mall that’s in the center of a residential area that’s not off the freeway,” Seyboldt said. One idea is to expand the zoning of that property to allow medical offices or light industrial businesses. “Maybe we’ll approach University Hospitals. But right now there would be no point in doing that, because it’s not approved for medical offices.”
No matter what ends up in those empty stores, “everyone pretty much agrees that we’re probably not going to get a lot of retailers coming in any more,” he said.
Tony Visconsi, a partner of Kelley & Visconsi Associates LLC, the commercial real estate brokerage firm that has been trying to sell the Macy’s property since it closed in March 2015, said he hasn’t had any luck finding buyers.
“We’ve talked to a few people, but a two-story department store in this day and age is a little obsolete,” he said. “There are no other department stores that are expanding that could take over that [entire] asset. Someone could just lease the first floor and not use the second floor.”
He said he has talked to Kohan about taking over the Macy’s space. “I’m hopeful that maybe he will buy the Macy’s, and possibly the Sears as well,” to redevelop along with the rest of the mall.
Rick Rebadow, executive vice president of economic development at the Greater Akron Chamber of Commerce, said the City of Akron is working with Kohan to attract new tenants and explore new uses for the nearly 50-year-old Chapel Hill Mall.
He said he and other Akron Chamber members will talk up Chapel Hill and Akron’s Main Street at the International Council of Shopping Centers’s Global Retail Real Estate Convention in Las Vegas May 21-24.
“Malls like Chapel Hill need to reinvent themselves, because the preference right now is for outdoor malls, the Legacy Villages,” he said. “Mike Kohan specializes in taking properties that need redevelopment,” and breathing new life into them, he added.
Mike Kohan said he tried unsuccessfully to persuade Sears not to close its stores at Chapel Hill and Richmond Town Square.
Kohan said residents need to know that “we are working very, very, very diligently to find venues that will be a benefit to the mall, to the community, to everyone,” he said. “We are pursuing any avenues that are going to add foot traffic to the mall. By no means are we interested in letting the community down.”
“Large spaces offer opportunity for fundraising events, festivals, farmers markets, miniature golf, dancing, concerts, banquets, theatre, and virtually any social gathering all under one roof with protection from the elements,” his website says.
“But these things don’t come easily, there’s a cost involved, and they don’t happen overnight,” he said.
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