The Hogsett administration and private-sector partners in Circle Centre might be tempted to cite its record 2015 profit and an uptick in occupancy as evidence that all is well at the giant mixed-use complex. But with big storm clouds on the horizon, this is no time to relax.
Circle Centre, managed by Simon Property Group Inc., will take a big hit to its non-anchor occupancy rate of 90.8 percent when Brown Mackie College vacates 25,000 square feet two years from now as part of a national retreat. Even scarier is the possibility the mall will lose its lone retail anchor, Carson’s, whose parent company, publicly traded Bon-Ton Stores Inc., is in danger of defaulting on its debt in the next year. Carson’s lease expires in less than two years, so its future isn’t assured even if Bon-Ton pulls through.
Brown Mackie’s exit from the mall’s chronically troubled fourth floor will simply drag down occupancy, which is already way below the average for Simon properties. But the public might not notice. The Carson’s space, however, with its prominent entrance at Washington and Meridian streets, would leave an ominous void if it sat empty. No one wants a vacant department store at what is essentially Main and Main.
Make no mistake, Circle Centre is not the city’s go-to shopping destination, even for downtown dwellers. It lacks the convenience retailers most people favor. But its size and location, filling more than two entire blocks in the heart of downtown, make the mall critical to the city’s considerable convention and tourism business. A bustling downtown mall tells the world Indianapolis is open for business.
Unable to fill Circle Centre with high-profile retailers, Simon has acknowledged the mall’s future will depend on a wide array of tenants—restaurants, retailers and office users—and possibly a residential component.
That transition already has started, with the Indianapolis Star, Brown Mackie and numerous restaurants filling prominent spaces once occupied by traditional retailers. Also on the drawing board is $20 million in various cosmetic upgrades and a new entrance on Georgia Street.
Even with those upgrades, Circle Centre will continue to be saddled with an ownership structure that makes one wonder who’s minding the store.
The city owns Circle Centre’s real estate, but the mall itself is owned by a partnership of Simon and 19 other companies that pulled together to develop the project in the early 1990s. While that arrangement was critical in getting Circle Centre off the ground, it likely isn’t the most nimble structure or the best ownership scenario long term.
Simon deserves credit for keeping the mall mostly full and profitable, but Circle Centre can’t be high on the company’s priority list. Simon owns most of the properties it manages but only a fraction of Circle Centre. The other partners are merely bit players. Only the city has much incentive to be the mall’s champion, and whether it assumes that role depends on who is mayor and where the mall falls on that mayor’s list of priorities. Of course, putting the mall’s future in the hands of a single entity would come with its own risks.
But that’s a discussion for another day. What Circle Centre needs now is a concerted effort to secure its future.•
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