IBJ broke the story this month that Simon Property Group Inc. has turned Washington Square Mall back to a lender, the latest evidence that the east-side property has fallen on hard times that likely are irreversible.
In the days that followed, Indianapolis residents took to Facebook, Twitter and the comment section of the article to vilify the Indianapolis-based mall giant, suggesting it is abandoning the troubled property after running it into the ground.
The facts don’t support that story.
Washington Square already was showing weakness when Simon inherited it in 1995 as part of the $1.5 billion acquisition of Ohio-based DeBartolo Realty Group, which built it in 1973.
Washington Square might not have gotten as much attention from Simon as properties in more prosperous sides of town, such as Castleton Square, but it did not get ignored. Through the years, Simon fought to plug holes and upgrade the anchor mix.
A Target, a Burlington Coat Factory, Dick’s Sporting Goods and a movie theater were among the anchors Simon lured in, as others, including Macy’s and J.C. Penney, closed their doors.
But it was a losing battle. By the end of last year, occupancy stood at just 43.8 percent, the lowest of any of Simon’s 295 U.S. properties, Securities and Exchange Commission filings show.
The reason for the decline? It wasn’t that the mall developer didn’t care about a second-tier property. It was that it could not overcome decades of economic setbacks on the east side—most notably the closing of huge factories along Shadeland Avenue that once provided middle-class wages to thousands of Hoosiers. Many of the manufacturers were replaced with distribution centers paying far-lower wages.
So what’s next? The future could hardly be murkier. The mortgage on which Simon stopped paying was a so-called securitized loan owned by multiple investors and managed by Wells Fargo. Jones Lang LaSalle has stepped in as manager while a buyer is sought.
What’s clear is that sticking with the enclosed mall template won’t work. Some of Washington Square’s anchors appear to fare well, but the mall corridors are a ghost town. No owner could get top-tier tenants to sign leases there.
Rather than throw darts at Simon, community leaders would be wise to direct their energy toward working with the city and other stakeholders on spearheading a revitalization plan for the site. It’s time to apply all their angst and anger toward a productive use.•
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