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Published: Sunday, 6/20/2004

Southwyck vacancies pass 50%, and more stores plan to leave

BY JON CHAVEZ
BLADE BUSINESS WRITER
Traffic in the mall's corridors is sparse. Traffic in the mall's corridors is sparse.
SIMMONS / BLADE Enlarge

As in a dying patient, the ailments have worsened at Toledo's Southwyck Shopping Center. Experts say the suffering could drag on for years.

And immediate prospects do not look good.

One of the area's three remaining regional shopping malls, Southwyck has lost four stores in just four months - including Payless ShoeSource and Footaction USA shoe store - and a sports collectibles store, the Sports Gallery, is to close Friday. Mall tenants also say the center's lone bookstore, B. Dalton Bookseller, has indicated it plans to leave next month.

Further, other retailers are trying to negotiate deals to move to sites in Perrysburg or to the Shops at Fallen Timbers project in Maumee, Southwyck store employees said.

The 950,000-square-foot mall has vacancies in 58 of its 103 store sites, up from 40 about two years ago. And Dillard's department store, its sole remaining anchor, said last month it will leave Southwyck to become part of the Fallen Timbers center, a General Growth Properties Inc. project not yet under construction but scheduled to open in November, 2005.

Diamond's Men's Shop owner Paul Stark, the last original tenant from Southwyck's opening in 1972, said he recalls when the mall was the premier one in the area and among the top in Ohio.

"It's a fabulous location," he said last week. "The median income around here is high. How it got to be such a bad mall is amazing."

Southwyck's principal owner, Sherman Dreiseszun of Kansas City, Mo., has taken few visible actions to rejuvenate the center or to find new tenants. Although he told The Blade last week he plans to find another anchor store, he did not actively market the mall or seek prospective tenants at last month's premier annual trade show for shopping centers, in Las Vegas.

Whether he can sign another anchor, he said, is uncertain, declining to reveal anything about what stores he is pursuing or what recruiting efforts he has undertaken. "I don't want to tell you anything we can't deliver on," he said.

As a result, one local commercial real estate expert said, Southwyck is likely to follow the path of North Towne Square.

North Towne was a 760,000-square-foot regional mall on Alexis Road in Toledo that lost anchors in the 1990s and in the last four years finally ceased to be a mall. Renamed Lakeside Centre, it is mostly empty, and its California owners have said they want to redevelop it as offices for service industries.

"I think it's a fairly safe prediction that, as North Towne exists today, without some major influence from the city and participation from the property owner, that will be Southwyck in a very short time because other retail projects around town are moving forward," said Dave Long, a retail expert with CB Richard Ellis Reichle Klein in Maumee.

Needed, he said, is for Mr. Dreiseszun to redevelop Southwyck, which wouldn't be cheap. But the problem may be persuading him to do so or to sell the mall to someone who will, Mr. Long said.

Mr. Stark, of Diamond's Men's Shop, said the mall needs to be sold but he doubts Mr. Dreiseszun would do so.

"I like Sherman as a person," Mr. Stark said. "He's been very nice to me over the years, but I think he's done a disservice to the area by not having done anything to manage it properly."

He said his shop is profitable, but he could move it to a nearby strip shopping center he owns if business deteriorates too much. He said he thinks Mr. Dreiseszun is making money on Southwyck and thus probably doesn't care about improving it.

"He's very frugal," Mr. Stark said.

Longtime Southwyck shopper Suzanne Taraschke, of Holland, said she frequently shops at the mall because of its convenience and the presence of Dillard's, Victoria's Secret, and the Gap, but she is saddened by its decline.

"I can't believe this mall has gotten to this point," she said. "I honestly don't know what would make this mall work now."

Southwyck was bustling five years ago but started to decline with the bankruptcy of Montgomery Ward and the closing of its mall store in 2001.

Three years earlier, an eight-screen theater complex in the mall was closed, and in 2001 a three-screen art cinema shut its doors.

Last July, Dillard's decided to shutter its home store there, leaving large prime spaces empty.

At least two potentially life-saving attempts for the mall were aborted.

In the spring of 2002, Toledo Mayor Jack Ford announced a major redevelopment of the mall that was to include a Sears Roebuck & Co. store and investment of $105 million from private sources.

But shortly afterward, Sears hit financial straits, changed leaders, and embarked on a new strategy to avoid malls and build free-standing stores. That ended Sears' interest in Southwyck.

In early 2003, Westfield America Trust, a major mall owner nationally and owner of the area's premier mall, Westfield Shoppingtown Franklin Park, announced it wanted to buy Southwyck. It said it would spend up to $60 million to redevelop the South Toledo center.

That deal appears to be dead.

One key hit happened when Westfield worked out a deal to bring Kaufmann's, a Midwest-based department store chain owned by May Co. Stores Inc., to the site of the closed Montgomery Ward, said Toledo City Councilman Rob Ludeman, whose district includes Southwyck.

However, Dillard's, which owns its store and its closed home-store site and has a half-interest in the rest of the mall, balked at bringing in Kaufmann's, a competitor, Mr. Ludeman said.

That put the "kibosh" on it, he said, and Westfield was unable to find other willing anchors.

Mayor Ford attempted still another rescue effort last month.

He and city economic development officials attended the International Conference of Shopping Centers convention in Las Vegas to try to market Southwyck to potential developers and store chains.

They had plans that proposed partial demolition of the mall and use either as a traditional mall or a mix of office and possibly even housing.

Upon his return, the mayor reported no major breakthroughs, and it was unclear last week whether any progress has been made since. John Loftus, the city official appointed by the mayor to oversee Southwyck, did not return calls seeking comment.

Mr. Ford has said, however, that if the mall becomes empty, the city could declare it a blight and initiate eminent domain proceedings.

Mr. Ludeman said he doubts that would work.

"Just because you declare eminent domain doesn't mean you get it for free," the councilman said. "Westfield was prepared to pay $30 million for it. Dillard's leaving will affect the market value of the property, but I can't imagine you're looking at anything more than a 10 percent drop-off in price."

So, he asked, where does the city get the money to buy it, and is that the best use of that money?

Because Southwyck is not a distressed property and because the taxes are being paid on it, eminent domain might not even be allowed by the courts, said Mr. Long of CB Richard Ellis.

Mr. Ludeman said he hopes other developers will tackle Southwyck. The city has some incentives in place to help, he said.

"It's a tough task, but it's not insurmountable," he added.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.



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