Pacific Retail Capital PartnersPacific Retail Capital Partners
Pacific Retail Capital PartnersPacific Retail Capital Partners

The suburban shopping mall isn’t going extinct. It’s adapting — with gyms, play spaces and apartments.

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As another Black Friday approaches, so does the hunt for bargains on holiday gifts for family and friends. And those heading to shopping malls throughout the region will encounter a retail landscape that’s gone through a seismic shift in recent years.

With the closure of many anchor stores like Sears and Carson’s, increased competition from online outlets and outdated facilities, some suburban malls in the Chicago area have found themselves on life support or shuttered entirely.

But through a process of transformation, shopping centers from Old Orchard mall in Skokie to Oakbrook Center in Oak Brook are surviving and, in many cases, thriving.

“We’ve been faced with the challenge of having to reinvent retail,” said Josh Dean, general manager for Yorktown Center mall in Lombard.

Making malls the place to be

To replace disappearing anchor stores, mall owners are increasingly turning to restaurants and entertainment businesses to bridge the gap, said Tom Poupard, director of development and planning services for the village of Northbrook. Gone are Montgomery Ward and Wieboldts, but popping up in their places are spots for kids to play, gyms, grocery stores — even apartment complexes.

The town’s Northbrook Court mall, for example, will soon be redeveloped to include a 315-unit apartment building, a grocery store, a “great lawn” ringed with restaurants and additional retail space in place of the old anchor Macy’s, Poupard said.

This visual shows plans for Northbrook Court calling for Macy's to be razed and replaced with an apartment complex, restaurants, retail and open space.
This visual shows plans for Northbrook Court calling for Macy’s to be razed and replaced with an apartment complex, restaurants, retail and open space. (Village of Northbrook)

The residences will include a mix of studio, one-, two- and three-bedroom units, according to Dan Walsh, senior vice president of Minneapolis-based Ryan Companies, the residential developer. It’s all part of diversifying, officials say.

“The larger trends in successful shopping centers point to having more destination activities, not just going to shop,” Poupard said. “So, go there to eat, go there for entertainment, go there for your yoga classes, your spin classes, go there to do your grocery shopping and to pick up grab-and-go meals.”

The Yorktown Center property in Lombard already has 125 apartments for people 55 and older, along with an additional 280 residential units for all ages on the mall property, Dean said.

The mall also became dog-friendly in June, allowing pups in the mall and about 60 percent of the businesses.

Shoppers walk their dogs through Lombard's Yorktown Center on Nov. 18, 2019.
Shoppers walk their dogs through Lombard’s Yorktown Center on Nov. 18, 2019. (E. Jason Wambsgans / Chicago Tribune)

More residential development looks to be on the horizon, as the Lombard Plan Commission recently recommended approval of 350 more residential units on Yorktown Center property, Dean said.

New businesses at Yorktown Center in the past two to three years include a 50,000-square-foot gym and an area that focuses on health and fitness businesses.

Harvey Ahitow, general manager of North Riverside Park Mall in North Riverside, said the former Carson’s store space is slated to be turned into a combination of residential, entertainment and restaurant uses, along with a sports complex, though Ahitow didn’t yet have more specific plans.

Creating entertainment destinations

Entertainment options have moved out of the center courts of suburban malls to become part of the storefronts. Ahitow said apparel stores used to account for about 70% of the retail space at area shopping malls, but estimated the current norm to be slightly more than 50%.

“The shopping center industry is most definitely in a state of flux,” he said. “Entertainment is one of the big things we’re seeing more of.”

A 15-ton Boeing 737 airplane waits to be lifted and installed Sept. 12, 2018, inside the KidZania store at Oakbrook Center.
A 15-ton Boeing 737 airplane waits to be lifted and installed Sept. 12, 2018, inside the KidZania store at Oakbrook Center. (Chuck Fieldman / Pioneer Press)

For example, Oakbrook Center, which has KidZania, a kid’s entertainment center, and Lifetime Fitness under construction, has presented free family movies the past few years on a giant screen in the outdoor mall’s village green area on Wednesday nights during the summer.

And Old Orchard in Skokie, the suburban area’s other regional outdoor mall, has a playground area for kids and presented free Monday night concerts in its west parking lot as far back as 50 years ago.

In nearby Niles, Ross Klicker, coordinator of economic development for the village, said Kids Empire, an entertainment center, has been proposed for a vacant Lucky Magee’s off-track betting building on the Greenwood Avenue side of Golf Mill Shopping Center. Klicker said construction of a Chase Bank branch is planned for property now used for parking along Milwaukee Avenue.

Ahitow said after North Riverside mall saw Carson’s close and Sears downsize to one level, Round 1 Bowling and Amusement opened in December 2018 in the lower level of the downsized Sears store with bowling, arcade games and other entertainment activities.

Round 1 bowling manager Mardin Enriquez said it’s a good spot for the business.

“There’s a lot of foot traffic in the mall, and a lot of people come to check us out in when they are in the mall, and a lot of times they come back once they see what we have here,” Enriquez said.

And Ahitow said Round 1 returns the favor, with some who come to bowl or play arcade games also making time to shop or eat at the food court.

Harlem Irving Plaza in Norridge is hoping for similar results when a subdivided Carson’s space opens with new tenants, an entrance on the second level and a new escalator to provide access to all three floors of the plaza.

The plaza, which goes by its acronym HIP, is holding social media contests by inviting photos with 35 graphics on walls designed to hide the construction. The redevelopment is expected to be completed by fall 2020, corporate marketing director Mara Russiaky said.

And FunFlatables, a space with a series of bounce houses, opened in October near the Kohl’s, on the opposite side of the mall from the former Carson’s location.

In Vernon Hills, Hawthorn Mall plans to open a two-level indoor park, complete with seating, trees and a coffee and wine bar, in the mall’s center court, said Whitney Livingston, chief operation officer for Centennial Real Estate, which owns the mall.

“It will be open year-round and was really based on resident feedback from the Vernon Hills community, which wanted a respite from the weather and a place where people can engage and hang out,” Livingston said.

Hawthorn’s improvement plan, known as Hawthorn 2.0, “has been designed around this idea of creating a rhythm of activity,” Livingston said.

A proposed rendering shows new restaurants and retail space at Hawthorn Mall surrounding a green courtyard where the Sears building now stands, and new apartment buildings to the right.
A proposed rendering shows new restaurants and retail space at Hawthorn Mall surrounding a green courtyard where the Sears building now stands, and new apartment buildings to the right. (Courtesy of Centennial Real Esta / Chicago Tribune)

Vernon Hills officials have been discussing a special taxing district to help fund improvements and create incentives for developers.

In recent years, a Dave and Buster’s and the AMC Hawthorn 12 movie theater were added.

Plans also call for demolishing the former Sears and Carson’s buildings and adding new retail, a grocery store, two apartment buildings, a courtyard and free-standing shops.

Like many other malls, the Gurnee Mills mall in Lake County took hits last year with the loss of anchor stores Sears and Toys R Us. But rather than attempt to fill the large spaces with similar retail giants, the mall determined the market called for attracting several smaller new businesses to help offset the closures.

One of this year’s big projects was the announcement that the mall will house four radio stations, featuring a variety of formats, expected to begin broadcasting live from Gurnee Mills this winter.

Under an agreement between the mall, the village and Alpha Media, two stations from Waukegan and two from Pleasant Prairie, Wisconsin, will be relocated inside the mall at Entrance G. The stations include, from Waukegan, WXLC-FM 102.3, an adult contemporary station, and WKRS-AM 1220, which now broadcasts Spanish-language sports through ESPN Deportes.

“To have four radio stations right here in our mall expands our reach, plus the advertising will help both the village and Lake County,” Gurnee Mills General Manager Randy Ebertowski said in late May. “It’s a phenomenal deal.”

Gurnee Mayor Krysti Kovarik said she looks forward to seeing the stations broadcasting live from the mall, and said it is the type of feature that helps keep the mall relevant at a time when online shopping is cutting deeply into an area that malls used to dominate.

At Orland Square Mall in southwest suburban Orland Park, empty anchor stores are providing an opportunity to diversify the mall’s retail and entertainment offerings.

Earlier this month, upscale department store chain Von Maur opened its fifth Chicago-area store in space previously occupied by Carson’s.

Nearby, a former Sears store is slated to house a 10-screen AMC theater along with a 24-hour fitness center, according to plans by Seritage Growth Properties, a real estate investment trust that controls the space.

Separately, the mall’s owner, Simon Property Group, plans to build and operate a 2-acre outdoor park near the mall’s southeast entrance, between the former Sears store and J.C. Penney store.

Taking up part of a parking lot outside the mall entrance, the park would have a playground with slides, swings, tunnels and climbing towers, according to the proposal.

Baby steps for some

Though the transformations are extreme in some shopping centers, in others the changes are more subtle, said Craig Furfine, a clinical professor of finance at the Kellogg School of Management at Northwestern University in Evanston.

“The change is a little less noticeable at higher-quality malls. Those malls tend to have anchor stores that have managed to remain successful,” he said. “Anchor stores are the lifeblood of a mall.”

Furfine said large retail anchor stores often have paid rent at a considerably lower rate than other mall stores.

“The whole purpose of the anchor tenants is to drive traffic,” he said.

An atypical mall with two anchors, Lincolnwood Town Center in Lincolnwood, has seen great success for Kohl’s, one of its anchors, said Steve McNellis, the town’s community development director.

“We’ve been told by several different mall managers over the years that the (Lincolnwood) Kohl’s is one of the higher performing Kohl’s stores in their portfolio. It does very well,” McNellis said.

The other anchor at the Lincoln Town Center, The RoomPlace, opened in August after Carson’s closed about a year ago, McNellis said. Malls struggle replacing an anchor, McNellis said, so he was pleased the mall owners were able to find replacement for Carson’s.

“To be able to replace a large store like that, and replace most of the square footage, in a year is very impressive from my point of view,” McNellis said.

The new The Room Place store at Lincolnwood Town Center is on two levels and includes this decorative lighted atrium.
The new The Room Place store at Lincolnwood Town Center is on two levels and includes this decorative lighted atrium. (Daniel I. Dorfman / Pioneer Press)

Change is a constant

Nationally, Stephanie Cegielski, spokeswoman for the International Council of Shopping Centers in New York, said many of the challenges faced by malls have been present since their inception. She said occupancy rates remain high, at about 92%, and the net number of malls for the past five years is positive.

Cegielski said an increase in nonretail businesses has helped malls adapt and evolve.

“We are seeing a rise in non-apparel tenants, including food and beverages options, fitness, health care, co-working spaces and experiential offerings such as competitive socializing — golf, ax-throwing and Escape Rooms, for example,” Cegielski said.

Cegielski said ultimately what is most popular varies on the needs of each specific area and property. She said malls must stay relevant to their communities and curate a tenant mix that serves the needs and wants of the consumers.

Malls that face more extreme challenges, Cegielski said, are typically in communities that are struggling economically.

“An area with high unemployment, high housing vacancies, etc., will likely see a struggling retail environment,” Cegielski said.

Not every struggling suburban mall is in an economically depressed area, though. In Niles, Golf Mill Shopping Center has seen an exodus of stores.

The Sears store at Golf Mill shopping center in Niles on March 14, 1964.
The Sears store at Golf Mill shopping center in Niles on March 14, 1964. (John Vogele / Chicago Tribune)

Once boasting a number of established mall stores such as Victoria’s Secret, Express, Bath & Body Works and more, the Golf Mill of today is series of vacant storefronts and a smattering of small, independent shops and personal service establishments. Signs seeking interested tenants are common sights.

Golf Mill started out with several entertainment features when it opened in 1960 as an open-air shopping center. It featured more than 70 stores, a bowling alley, movie theater and fountains, newspaper articles from the time said, according to Chicago Tribune archived stories.

The Mill Run Theater featured some of the biggest stars of the time performing in live shows, but closed in 1982 after 12 years of operation. The theater’s operator cited falling attendance, the Chicago Tribune reported.

Despite the loss of its original anchor tenant — Sears — in 2018 and the departure of numerous chain stores over the last few years, Golf Mill has retained anchors J.C. Penney, Kohl’s and Target, as well as the AMC Theatres.

Niles Village Manager Steve Vinezeano said representatives of Sterling Organization, the company that owns Golf Mill, revealed some potential plans for the mall property during an August meeting concerning improvements for the nearby Golf Mill Park. Those plans may include housing, “family entertainment” and more commercial tenants in the center’s so-called outlots, which are properties outside the mall, Vinezeano said.

More recently, it was revealed that the village of Niles and Golf Mill’s ownership are considering entering into an agreement that will allow the two to develop a plan for redevelopment at Golf Mill.

Vacant storefronts line a section of Niles' Golf Mill Shopping Center in September.
Vacant storefronts line a section of Niles’ Golf Mill Shopping Center in September. (Jennifer Johnson / Pioneer Press)

Plans for a new, 10-acre park with outdoor festival space, recreation and athletic fields just south of Golf Mill were unveiled publicly by the village in early November, with Vinezeano suggesting that the park — located on public land — could help draw business to the privately-owned mall.

“They are very interested in the possibilities of Golf Mill park,” Vinezeano said of mall ownership.

Joseph and Valerie Abel, Niles residents to viewed the park plans on Nov. 6, said they hoped a defined connection between the park and mall would encourage park visitors to walk next door to shop.

“But first you’ve got to get some good stores in there,” Valerie Abel said.

Cegielski said she anticipates that malls will continue to evolve.

“We anticipate malls will continue to diversify their tenant base and seamlessly integrate technology and experience into the traditional retail landscape,” she said. “It’s important to remember that the majority of retail sales, over 92%, happen at physical stores.”

But Ahitow said online shopping is a big part of the reason why there has been a trend at malls for fewer retail stores.

“The stores that are moving forward successfully have a combination of bricks and mortar and online shopping,” he said. “Those two things go hand in hand.”

The Kellogg School of Management’s Furfine said there are some recent situations in which online businesses have opted to open brick-and-mortar stores. Online retailers who’ve branched out, he said, include Away, a luggage seller; Glossier, a skin care company; Boll and Branch, a bedding seller; and Warby Parker, which sells prescription eyeglasses. Amazon recently opened a store at Oakbrook Center.

“It’s ironic,” Furfine said. “Some of those stores that started online have looked to make a physical presence known.”

Daily Southown reporter Mike Nolan and Lake County News-Sun reporter Jim Newton contributed.

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