Simon defending Fashion Mall turf

August 9, 2007
Back to TopCommentsE-mailPrintBookmark and Share
ShoppingAt least one local broker thinks Simon's plans to expand the Fashion Mall are a competitive jab at Premier Properties, which is planning a mixed-use development called Venu southwest of the intersection of 86th Street and Keystone Avenue. Sam Smith, CEO of Resource Commercial, said he isn't sure Simon's expansion is a "brilliant" move since second-floor retail doesn't do as well as first-floor shops. Simon plans to begin construction next year on a 150,000-square-foot addition to the Fashion Mall. The long-rumored addition of a second level on the west side of the property will add about 20 new shops.


PLUS: Simon announces new Greenwood tenants
Greenwood Park Mall is slated to get Ann Taylor Loft, Chico's, Coldwater Creek, Jos. A. Bank, White House Black Market, Dr. Tavel, Portrait Innovations and Whitehall Jewelers in addition to Barnes & Noble. Simon also officially announced new restaurants earlier reported in Property Lines: The Cheesecake Factory, Stir Crazy, BJ's Restaurant & Brewhouse, Paradise Bakery and Johnny Rockets.
ADVERTISEMENT
  • That's not surprising to see. Simon would no doubt want to try to lock up as many key tenants looking at the Indy market before Venu comes online. Let's face it, Venu is basically another Keystone Crossing.

    The two developments won't necessarily harm each other, however. Rather, they will only continue to make the Keystone/86th area more attractive as a retail destination.
  • While I love all Simon has done for this city, its nice that they finally have some competition here.
  • well said, urbanophile...
  • The Fashion Mall will certianly survive with the competition from Venu. Of course, none of the unique relailers at FM are going to want to open there, unless they're given incentives or larger space. However, I wonder about Castleton. There are only so many retail stores, and even if you factor in the rest of the unique stores available across the country that are willing to move here (IKEA maybe?), what happens if stores flee Castleton for Venu?
  • Retailers will not leave Simon. Simon tells retailers where they are going and what they have to pay. Best of luck to the developers of Venu. It sounds like a good project that would add vibrance to a great part of the city!
  • I believe they are complementary developments. Venu hasn't said much about retail, keeping their focus on dining, entertainment, lodging, and office space.
  • A lot of the truly high end retailers are not in Simon properties. How many Hermes stores (to pick one example, albeit one that doesn't seem on the list for Indy right now) are renting from Simon? Most of those types of businesses have gone for the standalone boutique approach and have abandoned malls entirely. Look at what has happened to some of the Michigan Ave. malls in Chicago as a of the premier stores seek to get their own storefront on Oak St. for example.

    Simon has traditionally been a Castleton Square type mall operator. I believe most of the higher end malls they've taken on have been as a result of acquisitions. So I wouldn't bank on Simon having too much clout with high end retailers looking at Indy.

    I think it will be good to have competition for Simon. For example, I've long argued that the fact that Simon owns or runs every mall in town is one reason that Circle Centre never reached its potential. There is a clear conflict of interest between Simon's shareholder duty to maximize profit on the one hand and the city's interest in maximizing downtown retail on the other. Consider: how motivated was Simon to really try to get Saks downtown when they owned the Fashion Mall? If it were back to Simon only running Circle Centre, they'd be solely motivated by that property instead of looking at maximizing value across the portfolio. I don't think Simon has done anything malicious, but clearly there is an agent-principal conflict here. The situation has a structural conflict.
  • What is the total square footage of the fashion mall right now?

    This is somewhat off subject, but where is the demand for a large office tower in that area (venu)? the only office market making strong gains in Indianapolis is in Carmel, with rehabbing going on dt. I'd also rather have some sort of office development concentrated downtown. Indy has done a great job downtown, but they need to maybe make a more concerted effort at retaining more of the office expansion downtown.
  • The Fashion Mall is 683,000 square feet.
  • This will be quite a construction project for Simon. I believe on the west wing they are adding a second floor? Adding a second floor to a structure that wasn't designed for an additional load is challenging enough, but then to do that witout disturbing the business of the tenants below is a monumental task. Also, they stated that they are adding 50,000 SF near Saks. The only place that I can see this happening is where the parking garage currently stands. Are they tearing down the garage? $100M doesn't go nearly as far in a complex renovation as it does in new construction. Anyone have any information on the project itself? I'm less curious about the new stores and more curious about how they're going to pull this off logistically.
  • I agree with your post urbanophile, however, I DO think Simon has some clout with very high end retailers. I understand what you're saying about certain high end boutiques abandoning malls. However, I think those boutiques abandon malls when there is an immediate and better alternative available. Taking your example, boutiques don't have much to lose in Chicago by moving into standalone locations on Michigan Avenue. However, in Indy, there are no such immediate options.

    Simon has several malls with fashion boutiques that are generally found as stand alone stores in cities like New York, San Francisco, LA, etc.

    Take for example, the Houston Galleria, a Simon property.

    Here's a directory of the mall's tenants:
    http://www.simon.com/mall/directory.aspx?ID=805

    It includes stores such as Louis Vuitton, Christian Dior, etc. So I'm sure Simon could lure those types of boutiques to the Fashion Mall. The question is simply is there a market for them?
  • I think the Venu offers what Simon does not making for a great balance in this area while taking it into the 21st Century.
    Regarding expansion downtown for business, I think we need to focus on leasing the existing space that is quite vast, before we worry about developing more.
  • Simon is already doing business with Louis Vuitton (well, LVMH). LVMH is the parent company of Sephora.

    Simon might have some clout, but I think it is over rated. For example, everyone talked about Simon's clout when Circle Centre opened, but that never translated into a premium tenant mix. Why was Simon never able to bring Saks downtown, for example? Either they a) didn't want to or b) couldn't. Either way, it isn't a good sign for their ability to make things happen for Indy.

    Keep in mind again, that the parent company of Bloomingdales is actually based in Cincinnati, but you may notice the lack of Bloomies in Cincy.

    I wouldn't be banking on any clout from Simon to bring in unique stores.
  • Simon has tremendous clout with all retailers including high end. I was with them for 20 years and saw them go from a no name developer of small town malls to the powerhouse they are today. True enough they did not develop many high end malls, although they did develop Forum Shops in Las Vegas, but who developed them no longer matters. It is who owns them and controls the space that matters. Simon controls more total space and more high end space than any other US mall operator. Most leases at malls like Fashion Mall will have radius restrictions that the retailer cannot open a store within a certain radius of an existing location anyway. Ask any local retail developer if they will go head to head against Simon and the answer is no. Kite, Lauth, Broadbent, Duke, etc. many have tried and many have failed. Lauth tried to do Clay Terrace in Simon's backyard and what happened? Not suprising that Simon became a partner and basically took it over. Kite tried to do Glendale and what happened? It is being torn down and replaced with a Target. Going head to head again Simon on 86th street means going against Fashion Mall and Castleton directly. A fool's errand, imho.
  • James, why didn't Simon bring Saks or any of these other retailers to Circle Centre then? Why is it almost exclusively generic mall retailers? You seem to be advocating the conspiracy theory that Simon could have brought anyone they wanted into Circle Centre, but simply chose not to in order to give themselves fatter profits at the Fashion Mall.
  • Simon made a huge effort to get Saks and offered money. Sak had stores in markets similar to Indy at that time and they were not doing well. So Saks said no. When L.S. Ayres and Lazarus both pulled out of downtown at a critical time for Circle Center it made getting Saks that much more difficult. Simon asked again. Again the answer from Saks was no. Simon (and the city) pulled out a huge checkbook and guaranteed a profit of $4 million/year over ten years up front to get Nordstrom. Basically they wrote a $40 million check to get Nordstrom downtown. Nordstrom was viewed as an acceptable alternative at that time. Simon had done Nordstrom deals at that time but really didn't have as good a relationship with Saks so they were forced to take the best deal they could get and that was Nordstrom. Circle Center is a very average performer by mall standards. It does about $400 PSF in sales roughly equal to the U.S. mall average. 2/3rds of the sales come from visitors/tourists and downtown office workers. Only 1/3 comes from residents. Even so, Circle Center has hurt Laffayette and Washington almost to the point of death. Even with Simon's clout these malls are dying. The sales at Fashion Mall are much stronger than Circle and most of the $$$ in Indy is up there. That is where the retailers would prefer to be. If Circle Center was doing $600 PSF like Fashion Mall, those tenants would choose to be down there instead, but it is not. I would be happy with Circle Center the way it is and the fact that it is still alive. Simon did a similar project in St. Louis in the 80s, it is dead. Taubman did a similar project in downtown Columbus, Oh that Simon recently bought as part of Mills. It is also dead and Simon is trying to unload it. Circle Center is actually one of the better downtown projects in the U.S. and after 12 years it is still at least average and that is saying something in the world of downtown malls. Only by having the RCA Dome, Conseco, the convention center, etc. does Circle Center survive. Without those activity generators it would be another Lafayette or Washington.
  • Circle Centre is also MUCH more beautiful & lavish than most of the malls around...
  • I think that Fashion Mall is top of the line for the State of Indiana. There aren't any other malls in the States of Ohio, Kentucky, Tennessee, or Alabama that exceeds the Fashion Mall. Given this, we draw people from various places to that mall. With that said, I think that competition is needed to give the city residents more options. I do think that Venu will provide an interesting mix that will only build up the NE corridor. This portion of the city has more malls within 10 miles than any other section of the city. All of these malls have survived. I think that Venu will only enhance the Fashion Mall, and the city.
  • I love the Ikea idea that was mentioned!

    Keeping Keystone Xing in mind why not a Neiman Marcus?!?!?
  • If Simon has so much clout that is so beneficial to Indianapolis, name an upscale store or two that is in Indianapolis but not in most peer cities (Cincinnati, Columbus, Kansas City, let's say) or soon will be? Saks? Nope. Tiffany's? Nope. (Incidentially, both Saks and Tiffany's are downtown in Cincinnati). Crate and Barrell? Nope. Sephora? Nope.

    When stores like Louis Vuitton, Dolce & Gabana, Hermes, Chanel, Gucci, etc. open in Indy and then don't open in all those other places, I'll believe Indy has got some clout thanks to Simon.

    The Fashion Mall is hardly the unique shopping mecca. Consider Columbus. Easton Towne Place in Columbus has an Apple Store, Anthropologie, Bang and Olufsen, bebe, Crate and Barrel, Swarovski, and Nordstrom among other stores. Saks, Sephora, and others are at Polaris Fashion Place. Arguably major chain retail in Columbus is better. It's suburban malls are certainly newer and and in better condition.

    And why, with all this clout, is Indy getting Nordstrom #2 instead of a new upscale anchor. Maybe Indy isn't on Neiman's list, for example, but if there were really all this clout, maybe they could be.

    As for Circle Centre, it has certainly been a survivor among failures in the region (City Center is toast, Carew Tower mall in Cincy is dying). But it is hardly the original vision that was touted. As for the split between out of towners and locals, that is evidence that all is not perfect even for Circle Centre and I've predicted it will face its own struggles in the future. Part of that split is due to the lack of unique retail. Who would come to shop at Circle Centre when the exact same stores are near your house? Nobody, that's who. Of course, downtown shopping, even in the likes of New York or Chicago, is heavily driven by visitors anyway. So it isn't necessarily all bad. But unlike 5th Av. or Michigan Ave., major retailers don't feel the need to plant their flag in downtown Indy even at the price of losing money.

    I'm not down on Simon here. I think they've been a company that has done very well by their shareholders. But their supposedly clout as not, at least not in any tangible way I've seen, paid off for Indianapolis.
  • Mary, I don't think Ikea will be here any time soon. I recall reading that Ikea prefers a market size of at least 3 Million. Its North American stores are often as big as 250,000 - 300,000 sq. feet. So, barring a drastic change of its stratgy, I think the mentioning of Ikea is only wishful thinking.
  • An IKEA in Indy would be awesome. Atleast they are putting one in Cincy, which is a lot closer than Chitown.
  • John C -

    Maybe IKEA prefers a market size of at least 3 million, but that's not a hard and fast rule. I was in Portland 2 weeks ago and saw a new IKEA store opening there while I was in town. Portland is nowhere near 3 million even if you include the Beaverton and Vancouver areas.
  • I am ecstatic to hear of the new tenets coming to Greenwood Park Mall. The far southside of Indy and Greenwood are going exponentially and all of the rejuvenation in this area is extremely helpful. Finally, there will be two Cheesecake Factory restaurants in the city. This will help to increase the economy around the southside and hopefully bring more shoppers to the southside from those who might live farther north. I would highly recommend anyone who hasn’t driven south on 31 from around Southport Road to past Greenwood Park Mall, to do so. So much is opening and being development. The area really looks great and cleaned as we begin to move in to fall 2007.
  • Brian,
    no offense but why are you heralding the opening of a second Cheescake Factory in Indy? That only solidifies our reputation as chain restaurant capital of America.
  • what happened to Elephant Bar coming to both Castleton and Greenwood malls?
  • Brian, the development on the southside is nothing to get excited about. Its all poorly planned sprawl.
  • IKEA does go into smaller markets, the Salt Lake City area recently had an IKEA open and their metro area is smaller than Indy's. Not sure what really determines what markets they enter.

    Elephant Bar and restaurant no longer list Indy as a Coming Soon location.
  • As much as I agree with the vast amount of sprawl in Indianapolis, these new developments are located farther south than the majority of sprawl (i.e. north of Thompson Rd and South East Street US 31). Additionally, having two Cheesecake Factories in the same city 30 miles apart is not a bad thing. I would love for more non chain venues to come to the city however, until that happens, I can live with another Cheesecake Factory.
  • Brian, the southward sprawl STARTS at Thompson Road and extends to Franklin along US31. Building more stuff further south just contributes more to sprawl.
  • Urbanophile,

    Have you lived anywhere else besides Indianapolis? Do you realize what a small city this is? I think we should thank Simon for having the tenants we have. If it werent for the leveraging power of Simon we wouldnt have the likes of Saks, Tiffany, BCBG, William Sonoma Home (there are only 8 of these in the US), etc. Are these the cream of the crop? Hardly. But Indianapolis is a small city. No matter how much leveraging power or clout Simon has, a tenant is not going to put their business in Indianapolis if it's not a good business decision. I'm from the east coast and lived in Long Island for many years. Roosevelt Field is one of the nations largest and most successful malls. There are over one million people in a 10 mile radius. The mall is 2.5 million square feet. You will not find Gucci, Hermes, etc. there. You have to go into the city. Not having those tenants has nothing do with Simon, but everything to do with demographics. Coming from the east coast I am so thankful for Simon and the shopping and restaurants we have with such easy access.
  • Nana -

    I have to agree with you. I moved away from Indy in 1991 when the only top nothch store available was Jacobsons. After moving back only a few years ago; I too am thankful for Simon brnging the stores they have and what they have done for Indianapolis!
  • I've been on vacation the past week and am just now getting back into the blogosphere. All these comments are really interesting. I especially liked the ones from James explaining how Simon brought Nordstrom to Circle Centre as a replacement for Saks. I had heard much of this before but it's good to see it from somebody who knows. I was out in Seattle and Portland on vacation and Indy could learn a lot from both cities. Their downtowns are incredibly vibrant, especially Seattle. And yes, IKEA has opened in both cities, so the 3 million population criterion I'm not sure holds. It sure would be nice to have one here in Indy. I can't imagine putting one in Cincinatti over here. Cincy is a dying city, from my point of view. If Saks and Tiffany's hadn't gone in when Cincy was fairly strong, they sure wouldn't be there now.
  • Nana, its nice to have Simon employees like yourself posting here. In regards to your post, Indianapolis has no retail that a similar sized city doesn't have. We are larger than Charlotte, Nashville & Austin, but their malls have stores like Neiman Marcus, Hermes, Louis Vuitton, Burberry, Benetton, Kate Spade, Michael Kors, Kenneth Cole, Lacoste, Swarovski Crystal & Montblanc. Could you ask your bosses why they are bringing those stores to malls in smaller sized cities? Thanks!
  • I love the fashion mall!

Post a comment to this blog

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
ADVERTISEMENT