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New tenants help push Circle Centre to record profit in 2015

May 24, 2016

Circle Centre mall reported record profit in 2015—bolstered by the arrival of Yard House, a full year of occupancy by The Indianapolis Star and a renovation of the fourth-floor movie theater.

Mall manager Simon Property Group Inc. said in an annual operating report to the city that Circle Centre earned $11.3 million—a 30-percent increase from 2014—on revenue of $24.7 million.

The jump in profit translated to an all-time high for the 20-year-old mall, Simon said, as the downtown shopping destination continues to add more office and restaurant tenants to the traditional retail mix.

Non-anchor occupancy for the mall climbed from 89.5 percent in 2014 to 90.8 percent last year. New tenants signed in 2015 included Lou’s Cajun Grill, Freestyle, Simon Youth Academy, Grand Slam Sports, N Dulge, #gifts, Owaly, and the Skymart One convenience store, in addition to Yard House and the re-opening of the Colts Pro Shop.

“Occupancy and sales levels have been maintained and poised to grow as the evolution of the property continues to attract a new wave of exciting restaurants, entertainment venues and retailers to downtown Indianapolis,” Circle Centre General Manager Luke Aeschliman said in the report.

Sales per square foot, the key measure of a retail property’s productivity, rose to $329.62 in 2015 from $326 in 2013. Simon last year failed to produce the 2014 figure despite IBJ requests.

Circle Centre’s productivity earns it a B- based on a grading scale from California-based retail real estate research firm Green Street Advisors.

The mall, however, lags far behind Simon’s portfolio average. Simon’s 209 U.S. shopping malls and outlet centers averaged 96.1 percent occupancy and $620 in sales per square foot in 2015.

Circle Center is poised to add more tenants in 2016, but the mall also has suffered several hits this year to its retail base. It has shed several tenants since the first of the year, including Johnny Rockets, Abercrombie & Fitch, American Greetings card shop, Gap and Gap Kids, Johnston & Murphy and Yankee Candle Co.

Another sign of potential trouble—longtime tenant Sweet Factory appears to have fallen behind in its rent. A Simon entity is suing Sweet Factory's Nevada-based parent Cambridge Restaurant Group LLC in an effort to collect nearly $20,000 it claims the company owes.

A hearing on Simon’s request to take possession of Sweet Factory’s space is set for June 1 in Marion Superior Court.

Among tenants moving into the mall are Mod-Mex eatery Nada, which opened in February,  and Tervis, a maker of insulated drinkware that opened earlier this month. Entertainment venue Punch Bowl Social and Pittsburgh-based sandwich chain Primanti Bros. both should follow in the fall.

Simon hopes a new Georgia Street entrance slated to open by summer will drive more traffic to the mall.

The entrance is among $20 million in improvements Simon wants to make to Circle Centre. IBJ reported in September that the upgrades would include an overall freshening of the 752,000-square-foot mall, including new lighting and seating, an upgraded food court, upgraded bathrooms, and improvements to other entrances to help better draw in passers-by.

Meanwhile, Circle Centre accounted for $7.4 million in sales taxes paid to the state, $2.2 million in real estate taxes, and $940,780 in food and drink taxes paid to the Capital Improvement Board.

Food and drink taxes to the CIB rose nearly 9 percent from 2014.

The city, which owns the land on which the mall sits and the building itself, leases the property to Circle Centre Development Co., a partnership of Simon and 19 other local companies that provided $75 million toward the mall’s $320 million cost.
 

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