Commercial Real Estate and Lafayette Square and Retail and Real Estate & Retail

UPDATE: Macy's closing wounds ailing mall

January 8, 2009

Macy's decision to close its store at Lafayette Square could deal a devastating blow to a mall already reeling from the loss of other major tenants.

 

Mall owner Ashkenazy Acquisition Corp. of New York has been working to stem an exodus of retailers since it bought the 113-acre, west-side property from locally based Simon Property Group in 2007.

 

Sears Holdings Corp. said in October that it would close its store there on Jan. 11, leaving 110 employees at the department store and automotive center out of work. And apparel retailer Steve & Barry's liquidated its stores, including locations at Lafayette Square and Washington Square malls.

 

Ashkenazy is investing $12 million in a Lafayette Square revamp that includes the December opening of a 75,000-square-foot entertainment center called Xscape. A 95,000-square-foot Shoppers World department store—the first in the Midwest—also opened last month, on the first floor of the former JC Penney space. Shoppers World is a family-owned, New York-based discount chain that operates 10 stores in New York and New Jersey.

 

Still, retail experts say it will be challenging to find replacement anchors to fill the void left by Sears, Steve & Barry's and now Macy's, which leaves a 160,000-square-foot hole in the mall.

 

The Macy's at Lafayette Square is one of 11 locations that Cincinnati-based Macy's Inc. said this morning that it will shut down. Stores slated to close include locations in Los Angeles, West Palm Beach, Fla., Nashville, Tenn., and St. Louis.

 

Final clearance sales will begin within the week. The closures will affect 960 employees, including 84 at Lafayette Square.

 

Workers affected by the cuts will be considered for positions at other Macy's locations and those laid off will be given severance benefits, the company said.

Current economic conditions led Macy's to close the stores, CEO Terry J. Lundgren said in a statement.

 

"While new store growth has slowed in the current economy," he said, "our long-term strategy is to continue to selectively add new stores while closing those that are underperforming."

 

Macy's Inc. says the closures will cost about $65 million, most of which will be booked in the 2008 fourth quarter.

 

Macy's opened at Lafayette Square in 1974. Other area stores are at Castleton Square, Glendale and Greenwood Park malls.

For more information or to weigh in on Macy's departure, go to IBJ's Property Lines blog.

Source: http://cms.IBJ.com/ASPXPages/6iframes/FrontEndArticlesDetailPage.aspx?ArticleID=28740&NoFrame=1
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