Regional malls adjust to stay on top of changes
03/01/2014 11:30 AM
03/02/2014 8:03 AM
For more than two decades, Towne East Square and Towne West Square were the places to shop in Wichita.
But in recent years, they slowly have become just another couple of big shopping centers, as retail on the east side spread up North Rock Road, then to Webb and Greenwich roads; and on the west side sprouted along 21st and up Maize Road.
And when the economy is down, and the amount of money people spend is stagnant, a retail sector built for the good times has felt the strain.
Some nationally have proclaimed the death of malls. But Simon Property Group spokesman Les Morris said that the rumor of malls’ death is premature – just head over to the mall on any weekend to see the crowds.
“Regional malls like Towne East and Towne West are not being developed from the ground up anymore, but it doesn’t mean it’s a dying industry at all,” Morris said. “The regional mall model is there, and the sales are spectacular.”
Towne East, which opened in 1975, is 1.1 million square feet and has 125 stores. It’s still the largest shopping center in Kansas, said Jeff Runnels, area manager for Simon Property Group.
Towne West, which opened in 1980, is 950,000 square feet and has 95 stores. It is among the largest centers in the state.
Sales are up at Simon Properties, which built and still owns the two Wichita malls. Sales per square foot for its malls were $579, up 3 percent from a year ago, and occupancy was 96 percent, near a historic high, Morris said.
That’s not to say that regional malls haven’t peaked in their retail dominance. And it’s not to say that some malls aren’t sitting in areas with declining appeal, or that some of their traditional anchors such as Sears and J.C. Penney aren’t in trouble, or even that the Internet isn’t taking an increasingly large bite out of all brick-and-mortar retailers.
Simon has certainly adjusted to stay on top of such changes.
It sold off the Wichita Mall on East Harry in 2002 and the Hutchinson Mall in 2004. It has added more nontraditional tenants at its regional malls to keep occupancy high. One of Towne East’s bigger tenants is Wright Career College.
“We are starting to see more nonretail uses in the industry,” Runnels said.
And, most importantly for Wichita, in December Simon announced that it would spin off Towne West, along with 43 smaller regional malls and a number of strip centers, into its own company. The smaller malls all have net operating income of $10 million or less.
Simon will continue to manage the spun-off malls and noted that the malls together have an occupancy of about 90 percent.
By spinning off the smaller malls and its strip centers, the remaining company will see higher occupancy rates and profits, the company said in a December news release.
In turn, Simon will focus on faster growing sectors: premium outlet malls, which have become the hot retail sector in the economically squeezed era of the last five years, and malls overseas.
Even so, malls continue to enjoy a future, said Morris.
“It may be the best delivery system of goods and services ever in this country,” Morris said.
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