Tenant exit leaves Circle Centre 4th floor almost vacant

April 1, 2010

The GameWorks virtual-realty arcade at Circle Centre mall in downtown Indianapolis has closed, leaving the struggling fourth floor with even more vacant space, and a movie theater as the lone remaining tenant.

Glendale, Calif.-based Sega Entertainment USA Inc., which owns the GameWorks chain, announced the closing this week as part of a company-wide restructuring involving seven total GameWorks locations nationwide.

“This challenging economic environment has forced us to make these tough financial decisions,” Sega President and CEO Cory Haynes said in a prepared statement. “The changes were necessary for us to move into the future as a robust, exciting and viable entertainment company.”

Just nine of 24 original GameWorks that once operated throughout the United States remain. For Circle Centre, the vacancy leaves a gaping, 27,400-square-foot hole on a floor already fraught with occupancy troubles.

A small notice posted at the GameWorks entrance at Circle Centre reads: “Due to technical circumstances beyond our control, we have been forced to temporarily close.”

A press release from Sega leaves no doubt, however, that the arcade won’t be reopening. GameWorks employed six people at the Circle Centre location, the company said.

Les Morris, spokesman for Circle Centre manager and part-owner Simon Property Group Inc., on Wednesday said he was unaware GameWorks had shut down and declined to comment on the fourth floor’s ongoing vacancy problems.

Its departure leaves the United Artists Theatre as the sole occupant on the floor that once housed the Brewskis, Flashbaxx and World Mardi Gras nightclubs, as well as a restaurant and a Ben & Jerry's ice cream parlor

The nightclub spaces have been empty since 2003, prompting Simon to consider a renovation that would transform 114,000 square feet on the fourth floor into modern office space with a wood-paneled entrance, high ceilings and skylights.

It’s unclear whether Simon still is pursuing the strategy.

Bill French, a senior vice president at the local office of the St. Louis-based Cassidy Turley commercial real estate brokerage, said multi-level retail leasing is extremely challenging, even in huge markets like Chicago. Indianapolis' struggling downtown office market adds to the difficulties.

“To that end, I’m not certain how aggressive [Simon is about an office conversion],” French said, “because there is a fair amount of space available these days.”

The fourth floor remains a blemish on an otherwise successful mall. Circle Centre occupancy jumps to 96.7 percent when excluding the space, according to an annual filing with the Securities and Exchange Commission. Simon did not disclose the occupancy rate when including the space.

The top floor was a late addition to the mall that opened in 1995. Buoyed by the success of fourth-floor entertainment attractions at Mall of America in Minneapolis, developers decided to boost Circle Centre's entertainment offerings.

The city owns the land under the 736,000-square-foot mall and paid more than half of the $319 million cost to build it. The city leases the property to Circle Centre Development Corp., a partnership of 20 companies that owns the mall itself. Simon's stake is 15 percent, according to SEC filings.


 

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