BY THE NUMBERS
Within a 25- to 35-mile radius of Towne Mall, there are already 15 shopping destinations featuring nearly 1,200 stores and restaurants. When Liberty Center opens later this year, that number will go up to more than 1,400, in addition to other retail developments in Liberty and West Chester townships as well as in the Kenwood area.
Mall at Fairfield Commons, Beavercreek: 142 stores and restaurants
The Greene Town Center, Beavercreek: 75 stores/restaurants
Dayton Mall, Miami Twp.: 167 stores/restaurants
Austin Landing, Miami Twp.: 16 stores/restaurants (Springboro Landing is under development across the street which is in Springboro)
Cincinnati Premium Outlets, Monroe: 104 stores/restaurants
Liberty Commons, Liberty Twp.: Projecting 216 stores/restaurants. Under construction with anticipated opening in late 2015.
Bridgewater Falls Lifestyle Shopping Center, Fairfield Twp.: 45 stores/restaurants
Voice of America Shopping Centre, West Chester Twp.: 60 stores/restaurants
Streets of West Chester, West Chester Twp.: 13 stores/restaurants; Second phase is under development.
Deerfield Towne Center, Deerfield Twp.: 58 stores/restaurants
Tri-County Mall, Springdale: 130 stores/restaurants
Forest Fair Village, Fairfield and Forest Park: 21 stores/restaurants
Northgate Mall, Colerain Twp.: 109 stores/restaurants
Kenwood Towne Center, Sycamore Twp.: 172 stores/restaurants
Kenwood Connection, Sycamore Twp.: Under construction.
Rookwood Commons, Cincinnati: 70 stores/restaurants
The Towne Mall Galleria in Middletown is attempting to do what other enclosed malls across the country, and regionally, have struggled to do: stay relevant amid America’s changing mall culture that has shifted toward lifestyle centers and online shopping.
The mall, located near the city’s Ohio 122 interchange with Interstate 75, is in the early stages of a rebirth under the ownership of a California investment group that bought the shopping center in October 2012. A Burlington Coat Factory, currently under construction, is set to open its doors at the mall this spring, and a Buffalo Wild Wings restaurant and Aspen Dental clinic could soon be joining the tenant list.
George Ragheb, one of the principle investors, admits that it hasn’t been easy getting the Towne Mall — once deemed a “dead mall” because of its extremely low occupancy rate — to this point. But he said he’s optimistic the redevelopment project will be a success and that “in 30 days there will be a lot of good news” to report about the mall.
“This is exciting because we are taking something that was dead, and we’re going to make it 100 percent full,” Ragheb said of the Towne Mall. “It’s challenging, and it’s hard as hell. But it’s very rewarding, fulfilling and exciting.”
National Public Radio recently reported in a series of stories on America’s mall culture that of the 1,200 enclosed malls in the country, only about a third of them are doing well. The recession, online shopping and the shift toward lifestyle centers — such as the $350 million mega-retail complex Liberty Center in Liberty Twp. and The Greene in Beavercreek — have pulled shoppers away from conventional indoor malls.
Older, established indoor malls such as the Towne Mall, Dayton Mall in Miamisburg, Tri-County Mall in Springdale and Forest Fair Village in Fairfield/Forest Park have all tried to reinvent themselves in recent years with mixed results, amid an explosion of new shopping options along the I-75 corridor.
‘This is a lucrative market for everybody’
Within a 35-mile radius of the Towne Mall, there are nearly 1,200 stores and restaurants at 14 malls and lifestyle shopping centers, with more than 200 additional ones coming online in the next few years with the Liberty Center. Some might question whether all of these shopping destinations can survive with so much competition around.
But the retail sector is thriving in the Cincinnati metropolitan area, according to Marcus & MillichapReal Estate Services, a national company that specializes in commercial real estate investment sales, financing, research and advisory services. Retail spending has increased in the region “thanks to rising employment, household income and consumer confidence,” and that is causing retailers to demand more space in the Cincinnati area, according to a 2014 third quarter report from the company.
Joel Dumes, vice president for investment in their Cincinnati office, said what appears to be a surge in retail development in the region is a reaction to “a pent-up demand” following the recession. He said the new growth is catching up with years of stagnation during the economic downturn.
“Retail follows rooftops, and this is a reaction to all of the new suburban subdivisions that have been built,” Dumes said. “The market went into a wall when it crashed in 2008. From 2008 to 2011, there was zero development. Now there’s a lot more.”
According to the 2012 population estimates by the U.S. Census Bureau, more than 2.125 million people (805,714 households) live in the 15-county Cincinnati Metropolitan Statistical Area with a median household income of $52,373 a year. Warren County is one of the fastest-growing counties in Ohio, and Liberty and West Chester townships in Butler County are among the state’s fastest-growing communities.
Dumes said vacancies are at an all-time low, rents are increasing, the cost of capital is down, and retailers are expanding. He said with the low gas prices, people are now buying goods and services that they might have deferred on over the past few years. He said he expects more growth in the retail sector as long as the economy keeps growing.
“This is a perfect time to build,” he said. “This is a lucrative market for everybody.”
Shaun Bond, a professor of real estate and director of the Real Estate Center at the Carl H. Lindner College of Business at the University of Cincinnati, also agreed the increased number of projects is a good sign of a growing economy.
“The American consumer is back in business,” Bond said. “Retail sales are up and developers are trying to get ahead of the demand.”
Bond said it also signals that investors are ready to move forward with projects as more financing is becoming available as the banking sector recovers. He said banks are going to be more aggressive as more opportunities present themselves, but they will still be cautious, looking more closely at the financials of proposed projects and dealing mostly with developers that have good track records.
“Retailing is a dynamic business with some concepts doing better than others,” Bond said, adding developers are also working to find new uses or re-purposing vacant retail space for office, medical, church and recreation uses.
Jesse Tron, a spokesman for the International Council of Shopping Centers, said the industry, nationally, is in a redevelopment stage.
“They are not building from the ground up,” he said. “We’re not seeing a ton of new development since the recession.”
However, Tron said since the recession ended, credit and capital have become more available as lots of money is being poured in, upping the value of current assets.
Tron said the industry is also more acutely aware of overbuilding, as they are looking to be even more strategic in their plans. But nationally, there will be more building of new facilities as a way to relieve higher rental rates in the coming years, he said.
“Developers and landlords are very aware of not over-saturating a market because they won’t make their money back on their investments,” Tron said. “They’re doing their homework to make sure they have a full understanding in what the market will bear in terms of retail space. Landlords and developers are really looking at this.”
Tron said another reason for an increase of building new complexes may be that some projects that were in the pipeline before the recession but were delayed and are now resuming due to the growing economy as well as the availability of credit and other capital.
“Without a doubt the economy is growing,” he said. “We did not expect a ‘U-shape’ recovery. It’s a slow, measured growth. The economy is still trending in the right direction but there are a lot of things that could derail it.”
Tron pointed out there are more jobs, slightly better wages, and a huge break at the gas pumps as of late for most Americans. “The consumer is healthier and that is what’s driving the industry forward,” he said.
For every penny drop at the pump for a gallon of gas, Tron said that equates to about $1 billion of discretionary income nationally that is available to be spent.
He also said there will be plenty of tenants to fill the retail space available. Tron said to fill retail spaces, landlords and developers are working to create unique mixes of tenants to deliver the most exciting, eclectic mix to consumer.
Towne Mall back in the game?
Ragheb said his group is at the right place at the right time as the nation and the region come out of the recession.
“We’re coming out of a pretty bad recession and retailers are expanding,” he said. “The market is full of different needs and some cater to different demographics. We are the best location on the highway and I think we’ll do pretty well.”
Ragheb said financing is one of the biggest challenges his group has faced. He said the investors have been forced to put more of their own money into the project, but if more financing could be found, their project could be developed in six to eight months.
The company, SA Mary Ohio, LLC, has been in the development business since 2000 and has done several projects in California. Towne Mall is their first project in Ohio and Ragheb hopes this will lead to more projects in the Midwest.
“No one thought this would happen, but we now have Burlington and that adds credibility to our story,” Ragheb said of the mall. “This is a good market.”
Ragheb believes the addition of Burlington Coat Factory will create a snowball effect in helping to attract other big national tenants for the mall. He said he’s talking to a number of other potential tenants, but declined to go into specific details.
The Burlington store is occupying 58,000 square feet of the former Dillard’s store, leaving another 50,000 square feet in that building for another tenant. This is in addition to the other open retail spaces inside the mall.
When asked about the increasing number of shopping, dining and entertainment areas in the region, Ragheb said as market and leasing structures change, it becomes attractive for retailers. He said if it’s the right place, right price and right terms, a retailer will take a very close look, especially if there is a good population base. But at the end of the day, the developer has to do what’s best for the project and make sure all of the tenants are complimentary to each other.
“This has been a deprived shopping area for a long time,” he said of the Middletown area.
Ragheb said the people who live in this area are looking for convenient locations and the right mix of tenants is needed to meet the needs of the community. He said developers have to give the consumers what they want — a good quality center with mid-market products at the right price for the shopping experience. Ragheb said there are no quality of life or arts and crafts types of stores.
“This will be done, not just by us, but through the support of the community and the grace of God,” Ragheb said.
On Middletown’s horizon
Ragheb’s group presented the final development plan for Towne Mall to the Middletown Planning Commission in November that included other outlot structures as well as new pylon signage for the property.
One of those outlots is an 11,600-square-foot new retail structure that would face Towne Boulevard at the southeast corner of the property. The plans submitted for the proposed new structure included a restaurant with outdoor seating, a dental clinic and two additional tenants, according to Planning Commission records. In an architect’s rendering of what the proposed building would look like, a Buffalo Wild Wings restaurant and an Aspen Dental Clinic were depicted as anchors for each end.
The Journal-News confirmed last week that a Buffalo Wild Wings restaurant will be locating in Middletown. Constance Williamson, regional marketing manager for the company, confirmed the Middletown location is slated to open in the fourth quarter of 2014.
Pat Simon, a corporate spokesman for Aspen Dental, would not confirm a new clinic location at the mall, but he did say that Middletown was on their expansion plan for this year.