Environment and Economic Development and Real Estate & Retail

Malls' redevelopment attracts familiar names: Borders, AMC Theatres among first tenants identified

September 25, 2006

A mix of familiar stores and upscale retailers will be moving into the nowvacant L.S. Ayres space at Greenwood Park and Castleton Square malls, which owner Simon Property Group Inc. is turning into small-scale lifestyle centers.

The open-air developments, which will be similar in design to Carmel's Clay Terrace, have attracted a host of major retailers, including Barnes & Noble, Borders and AMC Theatres. Smaller specialty shops and sit-down restaurants also are planned.

Barnes & Noble will be going in at Greenwood Park Mall, according to a midyear retail market report prepared by the local office of St. Louis-based Colliers Turley Martin Tucker, while Borders and AMC are set for Castleton Square Mall.

Simon did not return calls seeking comment, but state

records indicate Greenwood Park also will get a high-end Aldo shoe store and a Gymboree, which sells upscale children's apparel. The retailers' representatives did not return calls from IBJ, so it is unclear if the stores will be part of the addition or the existing mall.

Sephora, a high-end beauty products store, also will open in the Greenwood addition, said Purdue University retail expert Richard Feinberg, director of its Center for Customer-Driven Quality. Feinberg is not directly involved in the Simon projects, but learned of the plans through his research on retailers.

Simon is "moving quickly" with the lifestyle changes at both malls, the Colliers midyear report said. Demolition of the former Ayres buildings is in progress at both locations.

Retail brokers said they have seen plans circulating for the two projects, but declined to comment on which stores they have seen penciled in.

Brian Epstein, president of Indianapolis-based Urban Space Commercial Properties, said he's trying to get a few of his retail and restaurant clients into the developments and knows demand for the space is strong.

Both sites are attractive, he said, and Simon will have no problems filling the centers.

Neither mall has had trouble attracting shoppers, but the lifestyle additions can only improve the properties, said Connie Niessink, principal of Indianapolis-based Niessink Commercial Real Estate.

"Anytime you've got the ability to add some fresh new life to something that's already doing well," she said, "I think it will make it even better."

That's the idea.

The Ayres stores closed as a result of Cincinnati-based Federated Department Stores Inc.'s 2005 acquisition of St. Louis-based May Department Stores. The purchase left Federated, parent of Macy's, with two department stores in 23 malls, including Castleton and Greenwood.

Simon earlier this year purchased the vacant stores in seven malls, including the two here.

In an Aug. 1 conference call with analysts, Simon President Richard Sokolov said the Greenwood and Castleton locations are among those that will get "lifestyle additions with large-format bookstores, restaurants and specialty retail shops."

IBJ first reported the likelihood of multiple tenants replacing the shuttered L.S. Ayres stores in March. Simon confirmed its plans in a May news release, but still has not identified the tenants.

A Borders spokesman said the company has not signed a lease for a new location in Indianapolis. Representatives of Barnes & Noble and AMC Theatres did not return phone calls.

Feinberg said he also expects a Starbucks to go into both centers.

"It's just the way this lifestyle stuff works," he said. "All these have to do with the way you live and what you want in life."

Adding AMC Theatres to the Castleton location makes sense because it generates additional customers for the mall, Epstein said.

The lifestyle addition in Greenwood gives Simon the opportunity to bring high-end retailers to an area dominated by stores catering to the middle class, retail brokers say.

"There has been a shortage of so-called upscale retailers on the south side, and I believe this redevelopment at Greenwood Park Mall is targeted toward meeting some of that unmet demand," said John Byrne, a vice president and retail broker at Colliers.

The Greenwood addition will include four buildings with a combined 118,000 square feet, said Ed Ferguson, director of planning, zoning and economic development for Greenwood.

Plans for Castleton were not filed by IBJ's deadline.

Both additions will feature an open-air environment, with each storefront having street access.

Aldo's and Sephora's Greenwood locations would be their second in the area. Aldo already is at Circle Centre mall, and Sephora is at the Fashion Mall at Keystone at the Crossing. Gymboree has three locations in central Indiana, including one at Clay Terrace.

Simon also is working on other lifestyle additions throughout its 171-mall portfolio. In Lake Grove, N.Y., the Smith Haven Mall will get a Dick's Sporting Goods, Barnes & Noble and Cheesecake Factory, along with smaller shops. Indianapolis-based Simon also added Barnes & Noble, Pottery Barn, Bonefish Grill and Bravo to the Lehigh Valley Mall in Whitehall, Pa.

Lifestyle centers are increasingly common in central Indiana and beyond. Simon's Clay Terrace, which opened in 2004, was its first here. It also is working on Hamilton Towne Centre in Noblesville.

Lifestyle centers are part of a fastgrowing segment of retail development. Ends of malls across the country are changing in part because large department stores are facing tough competition from discount retailers like Target. At the same time, upscale stores-a staple of lifestyle centers-are doing well.

In 2002, there were 30 lifestyle centers in the United States, according to the International Council of Shopping Centers. Today, there are 143.

"They're very intriguing to shoppers and developers are focusing on them," Niessink said.
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