Circle Centre managed to boost profit and increase its store count in 2018 despite the springtime exit of its largest tenant, Carson’s.
But the financial performance for the downtown shopping center significantly trailed other retail properties in mall manager Simon Property Group's portfolio.
Circle Centre realized a profit of $13 million in 2018, an increase of $300,000, or 3%, from 2017, Simon said in its annual report to the city.
Sales per square foot at the mall fell to $321.80, from $338.50 in 2017. That's less than half of the per-square-foot average in Simon's total U.S. portfolio of 206 retail properties. The Indianapolis-based real estate investment trust reported sales per square foot of $661 in 2018.
The 24-year-old mall also saw a bump in occupancy, to 93.7% for the first three levels, up from 92.8% in 2017. The mall had 97 "stores" at the end of 2018, compared to 94 a year earlier. "Stores" also refers to restaurants or other tenants.
In 2017, about 448,411 square feet of mall shop space had been leased. That figure crept up 2%, to 458,063 square feet, in 2018.
The occupancy rate lagged Simon's portfolio average of 95.9 percent.
Total revenue for the mall rose by about 3.5% year-over-year, to $23.5 million. The mall has been undergoing extensive renovations, which are expected to conclude later this summer. The overhaul includes updated entrances and renovated restrooms. The food court also has been remodeled with new seating, lighting and televisions.
“As the business climate has changed, the property has continually evolved,” the mall’s general manager Nicholas Strause said in a letter to the city. “These improvements are enhancing the center as an integral part of the downtown community and position us for future growth and the next phase of the property’s evolution.”
Simon has opened one of the renovated entrances along Washington Street near Illinois Street, and has plans to continue exterior work for the next few months.
The Carson’s space has continued to vex Simon, its ownership group and city leadership since the store closed in April 2018, though there has been some interest in the space. This includes Target, which IBJ reported in April has had preliminary conversations with city leaders about occupying part of the space.
In an executive summary of the report, Simon wrote the closure of the 144,000-square-foot anchor provided the ownership group with an opportunity to “further explore multi-use options which will be more appealing to the consumer. There has been active interest in this space.”
Circle Centre also saw a 9% increase in its property taxes in 2018, after a major dropoff two years ago. It paid $1.2 million this year, versus just under $1.1 million last year. In 2016, the mall paid $2.6 million in property taxes.
Simon said it expects at least $37.7 million in revenue from non-cancelable lease payments through 2023, with another $27 million expected in the years afterward.
The city of Indianapolis, which owns the Circle Centre building and the land it sits on, 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 original development cost.