Commercial Real Estate and Circle Centre and Simon Property Group and Department Stores and Vacancy rates and Retail and Real Estate & Retail

Circle Centre to build entry through empty Nordstrom

November 17, 2012

Construction could begin soon in the former home of Nordstrom at Circle Centre mall, but the project does not signal an end to the mall’s limbo following the 2011 departure of its marquee anchor.

Mall manager Simon Property Group Inc. plans to build a temporary mall entrance using the Meridian Street doors to the 210,000-square-foot former Nordstrom space.

The plans call for two walls forming a lighted hallway to help coax more pedestrians into the mall. The new walls will not extend to the ceiling.

“It’s certainly something they feel they need to do during the holiday season to get people from Meridian Street into the mall,” said John Alberti, principal in locally based Alberti & Associates Inc., which helped Simon secure permits for the project.

Simon spokesman Les Morris declined an interview request.

The project should help Circle Centre by addressing the mall’s conspicuous lack of a Meridian Street entrance, said Bill French, a senior vice president of retail for the brokerage Cassidy Turley.

“The more pedestrian access you create to the mall, the better,” he said.

The department store chain Macy’s remains the odds-on favorite to replace Nordstrom, though it likely would take only a portion of the available space. Three or four national restaurant concepts could split the remainder.

The mall’s second anchor, Carson Pirie Scott, renewed its lease last year after Simon agreed to concessions to prevent another big setback for the mall.

French isn’t worried yet about lasting harm to the mall brought on by an extended anchor vacancy. He said the mall’s turnover rate is on par with other similar properties.

“Having anchor tenants always improves the leasing environment, but Circle Centre is a damn good location and I’m not hearing that tenants are looking to depart,” French said. “I’m not seeing anything that looks to be a trend or would be any different turnover-wise than any other malls.”

The homegrown boutique Indy Swank, which has its main store in Fountain Square, has opened a holiday pop-up shop in the former home of Origins on the mall’s third floor. It will remain through the end of January.

Another holiday pop-up: Go! Calendars, Games and Toys has moved into the former home of Hollister outside the former third-floor entrance to Nordstrom.

The mall in recent months also has landed permanent national tenants. Verizon Wireless is taking a corner space next to the second-floor entrance to Carson Pirie Scott, within shouting distance of rival AT&T.

And Granite City Food & Brewery, a Minneapolis-based chain with a restaurant at 96th and Meridian streets, is taking the former home of Bella Vita on the first floor and will also have frontage along Illinois Street between P.F. Chang’s and Ruth’s Chris.

Connie Niessink, a principal at locally based Niessink Commercial Real Estate, represented Granite City in the deal.

She said the restaurant chain would’ve preferred the Nordstrom space have a tenant but it obviously wasn’t a deal-breaker. She isn’t surprised there’s no replacement yet for the department store, based on her own experience lately.

“One big change from the glory years is everything takes way too long,” she said. “That’s not surprising based on the size, and potential complexity, of the deal.”

Earlier this year, Simon showed 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.

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.”•

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