Loading…
Tuesday, July 29, 2014
Current Weather
Loading Current Weather....
Published: Sunday, 3/20/2005

Southwyck owner no stranger to controversy

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER
Toledo's Southwyck Shopping Center is one of eight malls owned by Sherman Dreisezun. Toledo's Southwyck Shopping Center is one of eight malls owned by Sherman Dreisezun.
KING / BLADE Enlarge

From the metros of Denver and Cincinnati, from suburban Kansas City, and from southwest Toledo, the calls have come into the Missouri office of Sherman Dreiseszun.

Restore this mall, tenants and politicians demand.

Locally, the 82-year-old businessman operates the struggling Southwyck Shopping Center. But elsewhere his firm, Dreiseszun & Morgan, is involved in the operation of seven other malls, several of which also are having problems.

In Toledo, the longtime owner of nearly vacant Southwyck is a name without a face.

But as the once popular mall has emptied of tenants and customers in recent years, Mr. Dreiseszun has been criticized unfairly, according to his defenders by people who argue that he should have sold the outdated mall or invested more money to make it attractive to shoppers and retailers.

At stake in the debate, critics say, is not only the Toledo retail center, whose only remaining anchor is Dillard s Department Store, but also the property values of surrounding homes and offices for which the mall has been a centerpiece since the area was developed in the early 1970s.

Toledo Mayor Jack Ford suggested last year that the city would consider taking the 950,000-square-foot mall by eminent domain if things got too bad.

Since then, however, Mr. Dreiseszun has begun negotiating with city officials and private interests to sell the property. Negotiations are under way and a number of parties are involved, said John Loftus, special assistant to Mr. Ford.

People who have dealt with Mr. Dreiseszun describe him as a tough negotiator who drives a hard bargain. He can be brusque, as when he declined an interview for this story.

No sir, he said in response to the request. He then hung up the telephone, but not before correcting a reporter s pronunciation of his name.

Others have had different experiences.

He s a very bright, nice guy very personable, said longtime Southwyck tenant Paul Stark, operator of Diamond s Men s Shop. Mr. Dreiseszun no longer makes once-a-month visits to the mall, but still comes to Toledo occasionally, Mr. Stark said.

He is a very good negotiator, added Dave Long, a commercial real estate agent with CB Richard Ellis/Reichle Klein of Maumee.

He is straightforward and you know exactly where you stand with him at all times. You may not agree with him, but you know his position.

And Mr. Dreiseszun doesn t always toe the industry line. Although his job is to promote retail projects, he once told the Denver Post: There s too much retail everywhere. Every city in the country is overbuilt.

Married and the father of two, Mr. Dreiseszun has an office in the lower level of a modest professional complex in Overland Park, Kan., in suburban Kansas City, according to published reports and a former employee.

Eric Dove, who worked for Mr. Dreiseszun for nine years, describes the quarters as spartan.

The Southwyck owner s mall holdings are a mixed bag, according to the former employee. He s got a piece of the second-nicest mall in Kansas City, called Oak Park Mall. He s got the oldest or second-oldest mall, which is nearly empty.

Sherman Dreiseszun is considered 'very good negotiator.' Sherman Dreiseszun is considered 'very good negotiator.'
Enlarge

People who have visited his booth at gatherings of the International Council of Shopping Centers, where many retail deals get done, say Mr. Dreiseszun follows a low-key approach to mall marketing.

Surrounded by flashy displays of the major players, he sits behind a six-foot table flanked by staff members. Photos of his malls not always of recent vintage sit on an easel behind him.

Mr. Dreiseszun and his longtime business partner, Frank Morgan, who also was his nephew, began building malls in the 1960s.

They got their start in retailing at Vic-Gene Manufacturing Inc., a firm they operated to produce women s wear and other clothing for major retail chains, ex-employees said.

Corporate records in Missouri show the firm was founded in 1946 and was dissolved in 1979.

Mr. Dreiseszun was a close friend of a former president of Mercantile Stores, which would become a major tenant in Dreiseszun & Morgan malls, said former employee Robert Gingrich, who helped launch a number of malls, including Southwyck in 1972.

Toledo s former Lion Store chain, now part of Little Rock-based Dillard s Inc., was owned by Mercantile and was an original tenant of Southwyck. Mr. Dreiseszun s links to Mercantile are believed to have played a part in his decision to build the Toledo mall.

Sherman is a very, very bright and a very honorable person, said Mr. Gingrich, now a commercial real estate agent in suburban Kansas City.

In the late 1980s, before dot-com fortunes redefined what it means to be rich, Forbes magazine included Mr. Dreiseszun on its list of the 400 wealthiest Americans.

The magazine estimated the wealth of him and his nephew at more than $500 million. Most of the money was in banking and retailing concerns held not in their own names but by family trusts.

Mr. Morgan is deceased. At the time of the listing, Forbes described the pair as extremely secretive businessmen who shun traditional Kansas City society.

Through control of a group of regional banks, Mr. Dreiseszun and his partner helped reshape the Kansas City skyline in the late 1980s. Projects included a gleaming 34-story downtown office tower originally known as the AT&T Town Pavilion, now just Town Pavilion.

But the financial empire suffered a setback in 1992 when bad loans and the collapse of the commercial real estate market prompted regulators to take over two of the banks.

That same year, Mr. Dreiseszun and his partner were indicted by federal prosecutors in an alleged bid-rigging scheme involving rental of office space to federal agencies.

Mr. Morgan, who was just three years younger than his uncle, died in October, 1993, still proclaiming his innocence. Mr. Dreiseszun pleaded guilty to a misdemeanor in 1996, and paid a $375,000 fine, according to a newspaper account.

Today, the family-controlled banking group, Valley View Bancshares Inc., of Overland Park, Kan., includes seven banks with 11 offices and $2.4 billion in assets.

Dreiseszun & Morgan has a stake in five malls in the Kansas City area, including East Hills in St. Joseph, Mo.; two in suburban Denver; and one in the Cincinnati area, according to the Draper and Kramer Retail Property Services report, which tracks mall ownership.

Locally, various trusts of the Dreiseszun and Morgan families own about 50 percent of Southwyck through a firm called S-S-C Co.

Dillard s Inc. owns the remaining stake, along with the building in which its store is located. Dillard s real estate manager did not return a call seeking comment.

Southwyck was valued at $22 million for tax purposes until last fall, when Lucas County appraisers, apparently in response to increasing vacancies, reduced the value to $15 million.

Redevelopment of the mall has been discussed for years. Westfield America Trust, owner of the area s premier Franklin Park mall, planned two years ago to buy the property and pump in $50 million. But the plan fell through when an expected new anchor, Sears, Roebuck & Co., dropped out.

Southwyck isn t the only Dreiseszun mall where such discussions are going on.

In suburban Cincinnati, a new developer is converting Crestview Hills Mall, in Crestview Hills, Ky., into a new type of retail development called a lifestyle center.

The Dreiseszun group has retained an ownership interest in the project, according to people involved.

The Dreiseszun-run Westminster Square Mall, in the Denver suburb Westminster, Colo., received a $10 million upgrade, but only after municipal officials agreed to kick in $7.5 million of the cost.

Meanwhile, the firm s Metcalf South Shopping Center in suburban Kansas City has been described as a ghost town and the struggling Buckingham Square Mall, in Aurora, Colo., became an issue in a recent mayoral campaign.

Anchors at Buckingham Square, which opened in the 1970s, include a Target Greatland, Dillard s, and Mervyn s. But Dillard s is moving to a nearby mall that is being renovated.

And the fate of the Mervyn s chain is unknown after its sale to a group that announced plans to close some stores.

We ve been hoping for quite some time for the redevelopment of the property, said Lisa Strawn, an economic development specialist with the city of Aurora.

Because another, nicer mall is so close by, retail experts believe that the Dreiseszun property will have to be converted to a lifestyle center or some other use, Ms. Strawn said.

Mr. Dreiseszun kept the property up but didn t seem to have a great deal of interest in undertaking a major redevelopment, she added.

Adding to the urgency at Southwyck is an announcement by developer General Growth Properties Inc. that it will begin work soon on a lifestyle center development in Maumee that will include Dillard s.

If that happens, the nearby Dillard s at Southwyck will close, the chain has said.

Mr. Dreiseszun s defenders say that the age of Southwyck, plus changing retail patterns, are to blame for the problems at that mall.

Mr. Long, the commercial real estate agent, said that, while shunning a major redevelopment, the owner has kept up the mall.

He sees Mr. Dreiseszun as a bundle of contradictions, however.

He s a real estate icon and an incredibly wealthy individual who has had 40-plus years with major retailers.

But yet, he answers his own phone and is approachable.

Contact Gary Pakulski at: gpakulski@theblade.com or 419-724-6082.



Guidelines: Please keep your comments smart and civil. Don't attack other readers personally, and keep your language decent. If a comment violates these standards or our privacy statement or visitor's agreement, click the "X" in the upper right corner of the comment box to report abuse. To post comments, you must be a Facebook member. To find out more, please visit the FAQ.







Poll