Southwyck, where more than 40 storefronts are vacant, would get two anchors and a new food court.
A news conference last week at city hall to discuss the future of Toledo's struggling Southwyck Shopping Center had the feel of a coronation.
But, say retail and development experts, it is too soon to declare Westfield America Trust king in the local mall war that has pitted the Australian concern against Chicago-based General Growth Properties Inc., which wants to develop its own mall in nearby Maumee.
Despite Westfield's announcement that it plans to buy and renovate Southwyck, General Growth's stalled Mall at Fallen Timbers isn't a dead issue yet, say company executives and retail experts.
“We're still moving ahead with the project,” Louis Bucksbaum, General Growth's senior vice president, insisted late last week. “We're working continuously to put the project together.”
When announced two years ago, the Mall at Fallen Timbers was scheduled to open in November, 2002. But the project has faced many hurdles, including zoning issues, opposition from land preservation groups, and defection of anchor stores.
Stan Eichelbaum, a shopping mall consultant in Cincinnati, said the project is far from dead. “General Growth still has a shot if it can convince anchor stores to join or remain tied to its project,” he said. “General Growth is still a formidable developer.”
Sears Roebuck & Co., which was listed as an anchor store when the project was announced but which later said it preferred Southwyck, has refrained from commenting on the situation recently. Nor did J.C. Penney Co. and Kaufmann's, which have been mentioned as possible anchors for both projects, have much to say on the subject.
Westfield's purchase of Southwyck is not a done deal. The firm said it has agreed on a price with Missouri businessman Sherman Dreiseszun and Little Rock based-Dillard's, Inc., who together own the mall.
But the sale won't be completed until Westfield conducts an investigation of the property, the mall's financial records and leases, and other matters. That is expected to take 90 days. The deal is not contingent on any one aspect, such as commitments from new anchors, but Westfield is looking for such commitments and wants to add two general department stores, officials added.
Mr. Dreiseszun is staying mum on the deal. Reached at his office in Kansas City late last week, he said “No comment” and hung up on a reporter.
If all goes well, Westfield plans to invest $50 million to $60 million - not including the purchase price - to entice two anchors to join Dillard's department store, build a new food court, and add restaurants and other stores. The plans do not include expansion of the 950,000-square-foot mall that opened in 1972.
Retail experts said the new anchors likely will come from a few available choices: Sears; Penney; Von Maur, a department store chain based in Davenport, Ia.; and Mervyn's, a division of Target Stores, Inc.
Dillard's is likely to have a say in who the new anchors are, because Westfield officials said a standard practice in the industry gives major tenants a role in selecting new anchors.
What Westfield has proposed for Southwyck is a scaled-down version of a redevelopment proposed by Toledo Mayor Jack Ford and the current owners a year ago. That was a $100 million renovation that included an expansion and possibly three new anchors.
It is unclear why the current owners decided to sell rather than proceed with that plan. The price has not been disclosed.
Commercial real estate experts aren't surprised that a Westfield executive, flanked by Mayor Ford and City Council President Louis Escobar and Councilman Rob Ludeman, whose district includes Southwyck, announced the deal before the details were worked out.
Part of the strategy was to stop tenants' flight from the mall. More longtime businesses have bolted in recent months, including Jarman Shoes, Red Baron arcade, and Gordon Gifts. A recent count showed more than 40 vacant storefronts.
The announcement also could be part of Westfield's strategy to get potential anchors to commit to the project instead of to the Mall at Fallen Timbers, said Peter Shawaker, a partner with Michael Realty Co. in Toledo.
“They're trying to secure Sears,” he said. “Taking an aggressive, positive posture helps move the process along. ... Now they can go back to Sears and say, `We've made an announcement.' In office and industrial, you don't announce until it's done. But it's the nature of retailing. It's selling the sizzle.”
Yet another dynamic may be at work, experts said.
Westfield's interest in Southwyck may be linked to its desire to prevent new competition for Westfield Shoppingtown Franklin Park, which it acquired last spring.
The proposed Mall at Fallen Timbers would be a 1.2 million-square-foot, two-story structure with five anchors, theaters, restaurants, and the type of upscale shops that draw shoppers from throughout the region to Franklin Park, which has 1.1 million square feet. A planned expansion is to take Franklin Park to 1.3 million square feet.
By persuading potential anchors to defect to Southwyck, Westfield would hurt the Maumee mall project, national shopping mall experts said.
That would be a win-win situation for Westfield. Southwyck and Franklin Park wouldn't compete because the former would consist mostly of traditional stores and the latter would be more upscale.
Westfield and General Growth have clashed before.
They battled in Sacramento, Calif., where Westfield openly funded an environmental coalition that sued to block a General Growth mall on the grounds that it would harm the area's giant garter snakes, burrowing owls, and other endangered species. The case is pending and the mall is unbuilt.
Westfield likes to control multiple malls in a market to cross-promote and get better value from advertising. But Fred Marx, a retail consultant in suburban Detroit, said the firm's move at Southwyck could be a tactic to protect Franklin Park.
“Their strategy is to pre-empt anyone else coming in,” said Mr. Marx, of Marx Layne Co.
“The premier mall is Franklin Park. Toledo isn't Dallas where they're putting up a new mall every year because the population is growing. You're not a growing market but you're a stable one. Toledo doesn't warrant another regional mall but warrants an upgrade of an existing one.”
Besides Southwyck, Toledo has two other struggling malls: Woodville Mall in Northwood and North Towne Square in North Toledo, which was recently sold and is being shifted from strictly retail to offices and other mixed use.
Meanwhile, General Growth's Mr. Bucksbaum insisted the mall competition isn't turning into a race. He declined to say whether General Growth still has commitments from previously named anchors for the Fallen Timbers project - Sears, Penney's, Kaufmann's, and Gaylan's Trading Post.
Sears and Dillard's have announced their preference for Southwyck. Neither is likely to put a store in both projects because of their proximity.
Clouding the picture for any mall seeking tenants is that some retailers have reduced store openings. Penney opened just four stores last year, all of them relocations of existing outlets.
“We have not been in a growth mode and we've closed quite a few of our ... underperforming properties,” said Tim Lyons, a spokesman for the Dallas-based chain. He refused to discuss whether Penney's plans to add a store in Toledo, or where.
Customer traffic at Southwyck was thin one weekday afternoon last week. A hair salon tried to drum up business with a sign advertising discounts for mall employees, senior citizens, and people who walk the mall for exercise.
Customers interviewed welcomed any plan to revive the property.
Retirees June and George Thrasher, seated on a bench in the somewhat busy Dillard's wing, said they would be happy to see a Sears or Penney's in the mall and would shop there frequently.
Other mall customers were less enthusiastic about those options. “If it ain't gold, I don't wear it,” quipped Mary Martin, who said she would like to see more high-end stores and fewer boutiques catering to teenage girls.
Yevonne Ciapetta agreed. Sears or Penny's probably would succeed, she said. “But I would like a big department store like Kaufmann's - something that is not normally in Toledo.”