Real estate experts say they are confident the three-story space Carson’s plans to vacate in Circle Centre mall can be filled, by another retailer or office user, despite the mall’s troubles.
Bon-Ton Stores Inc., the struggling parent of Carson’s and other mid-tier department store brands, announced Wednesday that the store at the corner of Meridian and Washington streets is one of more than 40 locations slated to close.
A liquidation sale is set to begin Thursday and could run for as long as 12 weeks, Pennsylvania-based Bon-Ton said in its announcement.
Carson's exit leaves a major chunk of vacant retail space in the downtown market. More important, as the mall's only anchor, its demise could be a fatal blow for Circle Centre if an appropriate replacement can't be found.
“This is a disappointing development, but I have the utmost confidence in the location, the city and the Simon [Property Group] organization that it will be filled with a better retailer,” said Bill French, a veteran retail broker at Cushman & Wakefield. “Washington and Meridian has always been a pivotal corner. There are a whole lot of positive reasons why that will remain retail.”
A majority of “downtown stakeholders” polled by booster group Downtown Indy in 2016 indicated they want a Target store, when asked in a survey what they would most like to see downtown, said Sherry Seiwert, Downtown Indy’s executive director.
The Minneapolis-based discount retailer has been opening smaller stores with square footage ranging up to 80,000 square feet—much smaller than the 130,000-square-foot average for a Target store.
In October, Target opened 11 small-format stores in densely populated areas as part of its ongoing strategy to improve brick-and-mortar sales and better compete with online retailing giant Amazon. The retailer said it plans to open more than 130 small-format stores by 2019, including 30 in 2018.
Carson’s occupies 145,000 square feet, or about one-fifth, of the 800,000-square-foot mall.
French said most of Target’s urban stores are in larger cities, such as Chicago, New York and San Francisco, and isn’t sure Indianapolis would be a good fit for Target.
Still, downtown Indianapolis’ population has spiked in recent years, due to the construction of several large apartment projects, possibly making it more attractive to Target.
“You might put in a Target; you might put in a grocery store. There are better choices today than 10 years ago, as residential has continued to grow,” said Mike Wells, president of Indianapolis-based real estate developer REI Investments Inc. Wells was an adviser to Mayor Steve Goldsmith when the mall was built.
A hotel or residential user might not be a good fit for the space, he said, because the depth of the floor plates limits window availability.
Wells, though, said it's more likely that mall manager Simon Property will try to backfill the space with another office user, similar to how it lured The Indianapolis Star to Circle Centre. The Star occupies a portion of the space at the south end of the mall vacated by former mall anchor Nordstrom in 2011.
Seven years later, Simon has mostly filled the former Nordstrom space, with the Star and an assortment of restaurants, including Yard House, Nada, Punch Bowl Social and Burger Study. All can be accessed from street level, a big advantage in attracting patrons.
More office employees at the mall would help serve as customers for the smaller tenants and restaurants in the complex, Wells said.
“You are bringing in your own customer base, actually energizing the mall with people,” he said.
The city of Indianapolis in early 2017 extended its Circle Centre lease with Carson’s for five years, an agreement aimed at keeping the retailer in the mall until at least January 2023.
Because of its importance to the shopping center, the retailer received healthy rent reductions.
The department store’s lease had been scheduled to expire in January 2018. Under the new deal, Carson’s agreed to the same terms of a previous agreement reached in 2014, when the city of Indianapolis negotiated a rent-reduction deal saving Carson’s $300,000 annually for three years to keep the store from leaving.
When city officials agreed to the latest rent-reduction deal, they acknowledged in a memo that finding a replacement would be unlikely.
“Retaining [Carson’s] at the mall is of heightened importance because [Simon] has been unable to find another tenant that is willing (without tens of millions of dollars of cash incentives) to operate a department store in the mall,” the memo said.
The loss of Carson's is just the latest challenge for the downtown mall, which still has not moved forward with a $20 million renovation that Simon proposed nearly two years ago. It has suffered a steady exodus of smaller retailers from its interior corridors.
Andrews Jewelers, an original tenant of the the 23-year-old mall, closed just on Monday.
At least a dozen other tenants have left in the past few years, including Abercrombie & Fitch, The Loft, The Limited, and Gap and Gap Kids, giving way to the likes of a second GlowGolf location, an eyebrow threading boutique and a convenience store.
Carson's was not an original tenant in Circle Centre. It took over the spot vacated by original anchor Parisian in 2008. The space itself is part of the historic L.S. Ayres & Co. Department Store Building, which was designed by renowned local architectural firm Vonnegut & Bohn and built in 1905.
Despite the struggles of both the mall and Bon-Ton, Seiwert at Downtown Indy said she was still stunned by the news of Carson’s impending closure.
“We knew the possibility was there,” she said. “But, no, I didn’t anticipate that it would be [so soon].”