Without a rapid-fire lease deal and renovation, the former Nordstrom anchor space at Circle Centre mall will sit idle for a second holiday shopping season.
The high-end department store chain closed the 210,000-square-foot downtown store in July 2011. Nordstrom opened with the mall in 1995, helping ensure the success of the publicly financed project.
The more general-audience-oriented department store chain Macy’s remains the odds-on favorite to replace Nordstrom, though it would take only a portion of the available space, industry sources said. Three or four national restaurant concepts would split the remainder.
The mall’s second anchor, Carson Pirie Scott, renewed its lease last year after property manager Simon Property Group Inc. agreed to concessions to prevent another big setback for the mall.
Simon has been showing prospective tenants for the Nordstrom space a site plan that includes an unnamed department store at the northwest corner of Meridian and Georgia streets and restaurants along Maryland Street west of Meridian.
If Simon can land a department store, its challenge will turn to the logistics of dividing the space for customer access and to accommodate mechanicals and loading docks, industry sources said. Recruiting restaurant concepts interested in joining the downtown mix is the easy part.
“We’re working hard on it,” said Simon spokesman Les Morris, who said the company is holding off on an announcement until lease deals are finalized for the Nordstrom space. “I’ve seen some good proposals.”
Replacing Nordstrom has been tricky since the space is so large and anchor stores these days are taking smaller spaces. The population density and household incomes for the area surrounding the mall also make it a tough sell because the numbers don’t reflect Circle Centre’s reliance on convention visitors. And the mall isn’t among the highest performers in Simon’s portfolio.
Excluding the Nordstrom space, Circle Centre mall in 2011 saw its occupancy rate for the first three floors fall to 91 percent from 93 percent, and sales per square foot decline to $336 from $341, according to an annual report Simon prepares for city officials.
That’s well below the more than $400 average for Simon malls. The company blamed a shortened Indiana Pacers season and lower attendance at Indianapolis Colts games for the decline.
The mall earned $8.8 million on revenue of $22 million, a decrease of $381,000 that Simon blamed on “a decrease in minimum rent and reimbursements in the Carson Pirie Scott renewal.”
The mall in 2011 renewed leases with Banana Republic, Aeropostale, Brookstone and Yankee Candle and added Teavana, Francesca’s Collections, California Pizza Kitchen, Dairy Queen and Brown Mackie College—which took 25,000 square feet on the mall’s vacancy-plagued fourth floor. (The deal pushed the mall’s overall occupancy to 91 percent, up from 85 percent.)
But 2012 has brought a new round of setbacks: The teen fashion chain Hollister closed its store near the entrance to the former Nordstrom; skin-care chain Origins closed its location next to The Finish Line; and space that housed holiday season pop-up shops for Vera Bradley and Love Sac next to the Carson Pirie Scott mall entrance remain vacant.
Simon offered an update on the search for a Nordstrom replacement in the May 11 report.
“This is an opportunity to find a tenant or tenants that even better suit the Circle Centre shopper and will complement the entire downtown area,” mall management noted. “There has been strong interest in this location due to the vibrancy of Indianapolis’ core and we look forward to making an announcement in the near future.”
Many retail observers figured Nordstrom eventually would abandon its downtown store after the chain added a second Indianapolis location in 2008, at The Fashion Mall at Keystone. The market is too small to support two Nordstrom stores, which tend to cater toward repeat upscale customers, not visitors.
The city built the Circle Centre store for Nordstrom at no upfront cost to the retailer and likely would offer a similar incentive deal for a replacement.
“City officials have talked internally about scenarios and ideas, but the city has not formally engaged in negotiations with another tenant,” Deputy Mayor Michael Huber said. “We’d like to get a new tenant in there, the sooner the better.”
Huber said it’s too early to discuss the proposed layout of the space, which calls for restaurants along Maryland Street and not the new pedestrian streetscape of Georgia Street, which the city envisioned as a haven for outdoor dining.
The first priority is landing an anchor tenant.
“We’re not pushing for restaurants on Georgia Street, but that could change if we figure out a way to make it happen,” Huber said. “Given the substantial investment the city has made, we want to make sure it’s successful and the new tenant works with Georgia Street.”
Simon’s plans for restaurants along Maryland make sense from both a structural and practical standpoint, said Steve Delaney, a principal in locally based Sitehawk Retail Real Estate.
For starters, the multistory portion of the former Nordstrom and its escalators are to the south. Restaurants also prefer Maryland Street to Georgia Street.
“It’s a little closer to the daytime population and the middle of the mall,” Delaney said. “Aesthetically, go south. But from an operational standpoint, they’d prefer to be north.”
Scot Courtney, director of retail services in the local office of Lee & Associates, isn’t buying it.
“Georgia Street is now set up for restaurants,” he said a few weeks ago at a retail leasing event in Las Vegas. “You can’t plan it out any better.”
The city owns the land under Circle Centre and its parking garages and paid more than half the cost of building the mall. Most of the mall structure itself is leased by a partnership of 20 mostly local companies, including Simon, which collects fees for management and leasing.•