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BLOOMINGTON — Online shopping. Bankruptcies and portfolio downsizing. Looting. An infectious disease pandemic.
Bloomington-Normal’s brick-and-mortar retail industry has weathered a range of shifts in consumer behavior and economic pressures in the last decade.
The once-vibrant mall culture has tarnished into darkened shopfronts and cracked parking lots. Store liquidation and “space for lease” signs are more common than grand opening banners. Smartphone apps and next-day shipping have replaced the seasonal catalog.
Eastland Mall — the 732,651-square-foot east Bloomington monument to that ongoing paradigm shift — reported a 24% vacancy rate at the end of 2020.
But during a recent visit, The Pantagraph counted 40 tenants and 36 vacancies, totaling a vacancy rate of 48%.
“The mall culture has definitely been on the decline for a long time,” Rachelle Cantero, 44, of Bloomington, said after a trip this week to the east Normal Target. “It’s sad, for me, to see Eastland Mall in the state that it’s in.”
The slow bleed at Eastland certainly reflects a national trend at indoor malls.
Real estate industry data for June, compiled by property consultancy Jones Lang LaSalle, shows that vacancy rates at U.S. indoor malls could top 10% by the end of 2021. In 2010, that figure was at 5%.
“Pandemic aside, malls have been transforming over the last several years to add new uses, and that trend will continue moving forward,” said Stacey Keating, senior director of public relations and corporate communications for CBL Properties, Eastland’s parent company based in Chattanooga, Tennessee.
But the national data also shows a positive trend: Outdoor shopping centers and “power centers,” or open-air shopping plazas anchored by big-box retailers and smaller tenants, are performing well, with vacancy rates of 7%.
That’s the case in Bloomington-Normal, too, according to a Pantagraph analysis which found that more than a dozen shopping centers, plazas, strip malls and outdoor retail variations carry a combined average vacancy rate of about 25%.
Local property managers said that’s indicative of an overall shift in the retail industry, wherein smaller shopping centers lining commercial corridors — built when there was no space at Eastland — are now the dominant model.
“Businesses are becoming increasingly savvy about site selection,” said Jack Fahler, senior property manager of M&J Wilkow, which owns Normal’s outdoor mall, The Shoppes at College Hills. “Many are seeking open-air shopping centers as the ideal location of the business, whether it’s an entirely new location or a relocation of their existing store.”
Eastland Mall’s fall
When Eastland Mall opened in 1966, the massive indoor shopping center served as a regional retail destination that would also generate jobs and tax revenue.
It symbolized a model in the retail industry, wherein smaller beauty, fashion and food businesses shared customers with juggernaut department stores under the same roof.
In 2002, the mall reported a vacancy rate of 2%, bolstered by five anchor stores — Sears, J.C. Penney, Bergner’s, Famous-Barr and Kohl’s.
But within a few years, as the Twin Cities and its economy swelled, so too did the competition for local consumers. What’s more, larger national economic forces weighed on corporate and chain retailers with a local presence.
The first domino fell in 2017, when Macy’s, which took over Famous-Barr, became the first anchor to close at the mall. That move was part of a wave of 100 Macy’s store closings that year across the United States.
Six months later, J.C. Penney announced the Bloomington store would shutter alongside 137 others.
In April 2018, Bergner’s announced it would leave the mall, after assets of its bankrupt parent company, Bon-Ton Stores, were sold to liquidators. Four months later, Sears gave notice that its doors would permanently close by the end of the year.
That series of pullouts left Kohl’s as the mall’s main anchor, alongside a collection of mid-sized retailers like Old Navy and ULTA Beauty, and fitness chain Planet Fitness.
In the three years since the carveout, a number of other staple Eastland stores — Payless Shoes, Charlotte Russe, Christopher & Banks and H&M — all announced closures because their individual parent companies liquidized after declaring bankruptcy.
The mall’s food court, added in a 1980s expansion, now hosts just three restaurants: Gloria Jean’s Coffees, Kobe Japanese Steak & Seafood and Pretzelmaker. Great Steak, a national restaurant chain specializing in cheesesteak sandwiches, was evicted in July for unpaid rent.
Ultimately, in the fall of 2020, amid the opening acts of the coronavirus pandemic, Eastland’s parent company, CBL Properties, itself filed for Chapter 11 bankruptcy protection.
Eastland Mall’s future
Filings with the Securities and Exchange Commission show that CBL continues to report a loss on impairment for Eastland. For the first quarter of 2021, that figure was at $13,243, according to SEC filings.
Keating said both sales and customer traffic at the mall are rebounding and returning to pre-pandemic levels.
“I think if the pandemic taught us anything, it’s how much people value the experience and socialization that brick-and-mortar shopping centers offer,” Keating said. “Online shopping has certainly grown, and the pandemic fueled some of that, but once our malls were allowed to reopen, we saw traffic start to rebound quickly.”
When asked about vacancies at the mall, Keating said management has seen an uptick in interest in available properties, mostly from local and regional business owners.
A Bloomington-based women’s boutique, Sugar Baby Muahh, is opening Oct. 25.
But Keating said the “traditional mall” model of a complex “anchored by several department stores and consisting of a primarily retail mix inside are gone.”
What’s emerging, she said, “is a more dynamic, vibrant destination that offers customers not just retail, but dining, entertainment, fitness, and other uses.”
Open-air shopping the new norm
That revised model is especially popular across Bloomington-Normal’s major commercial corridors, which feature a collection of strip malls, power centers and shopping plazas.
The six properties owned and leased by Tentac Enterprises — Brookridge Center, Eastland Commons, Eastland Square, Market Square and Prospect Center in Bloomington, and University Center in Normal — all have limited vacancies.
And larger centers like Empire Crossing, which hosts retailers like Dick’s Sporting Goods, PetSmart and HomeGoods, has a 29% vacancy rate, with one anchor vacancy and four smaller openings. The nearby former Shell gas station is also up for grabs.
Bloomington grocery-anchored centers are also holding their weight. Bloomington Commons, with Schnucks, Barnes & Noble and Chuck E. Cheese, is now home to new Texas Roadhouse and a larger JOANN Fabric and Craft, which will open this fall at the former Toys R Us store.
The JLL data shows that model is doing well across the country, with grocery-anchored centers at a 4.2% vacancy in June.
Ohio-based property manager Phillips Edison & Co., which owns College Plaza in Normal, echoed similar trends. The shopping center houses retailers Michaels, Bed, Bath & Beyond, and Shoe Carnival.
Major retailers once housed indoors are increasing their presence in open-air and grocery-anchored shopping centers, said Megan Kivlehan, a representative with Phillips Edison & Co.
“They recognize the value these shopping centers present in terms of foot traffic, and their proximity to consumers,” said Kivlehan. “Our centers sit at the hearts of their communities and support retailers’ omnichannel commerce strategies by providing for more efficient and convenient last-mile delivery and buy-online-pick-up-in-store (BOPIS).”
What sets Phillips Edison & Co. apart from the rest, however, is the business’ focus on necessity, Kivlehan added. Many of the goods cannot be found online, or they offer services such as nail salons, fitness centers, and quick-service restaurants.
College Plaza, near grocery chains like Walmart, Meijer, Kroger and Hy-Vee, is in a high-traffic area, making it a prime location for other retailers.
The plaza recently reached full tenant occupancy, according to site plans.
Sierra Trading Post, an outdoor and hiking gear retailer owned by TJX Companies, will open in 2022. Cold Stone Creamery, which was housed at The Shoppes at College Hills, is also moving into a space next to the Five Guys restaurant in the plaza.
Normal’s evolving mall model
Just across the pond, The Shoppes at College Hills touts an upscale, “open-air” lifestyle and shopping center where consumers shop, eat and play.
With white buildings and boutique-style storefronts, the 246,245-square-foot campus is built around anchors Hobby Lobby, Target and Von Maur. But nearly 20 years ago, the mall told a different story, one plagued with empty storefronts and financial struggles.
College Hills Mall, built in 1980, struggled for years before Cullinan Properties LTD of Peoria acquired the property in 2004, razing the building and creating the outdoor shopping center it is today. The mall closed briefly for construction and reopened in spring 2005.
The Town of Normal, as part of the deal, issued up to $4.26 million in bonds to the firm to revitalize the dying mall. Cullinan would pay off the bonds within 20 years and would receive a property tax abatement.
M&J Wilkow, a Chicago-based real estate firm, and Alto Real Estate Funds, based in New York, acquired the shopping center in 2017.
Today, shoppers can enjoy a variety of retail stores, some which have lasted since The Shoppes at College Hills reopened — Hobby Lobby, Target, Von Maur, Chico’s and Loft — while others have seen less success.
In a recent visit, The Pantagraph counted a total of 40 tenants and 12 vacancies, for a vacancy rate of 33%.
Last winter Crunch Fitness moved into the former Hobby Lobby building, a remnant of the original College Hills Mall. The gym occupies around 45,000 square feet on the west side of the building, with plans to convert the remaining 35,000 square feet into a multi-tenant space.
Most recently, a Dry Goods clothing store announced plans to open a location in the plaza area of The Shoppes near Von Maur.
Leasing activity is on the rise, Fahler said, and with an increase in small businesses, owners are looking to outdoor shopping centers as prime locations.
“For us, this has resulted in new restaurants, boutiques and other small local businesses that have a positive impact on their local communities,” he said. “It has been fantastic to watch these small businesses grow.”
Shoppers were steadily pulling into the parking lot outside Hobby Lobby and Target on Wednesday afternoon. Ardis Stewart, 57, of Normal, was just leaving the mega craft store after picking up a few items.
Stewart, who has lived in the Bloomington-Normal area for 25 years, said she has only visited Eastland Mall around half a dozen times, but regularly frequents The Shoppes at College Hills because of the Hobby Lobby and convenience.
“For me, it’s easier,” she said. “Because Hobby Lobby is the only place I go, I can park right here, get in, get out, I don’t have to walk past a lot of other stuff or find parking. It’s really just: This is my Target, this is where I’m going, I don’t care about the other places.”
Cantero was leaving Target with her son, Ross Luety, 9, after spending the afternoon shopping for an anniversary present for her husband. Cantero said while she shops at both Eastland Mall and The Shoppes at College Hills, the latter is closer to her home.
But, the decline of mall culture is sad, she said. Indoor malls, and some outdoor malls, struggled even before the pandemic due to the rise in online shopping. Under coronavirus restrictions, Cantero said it’s become difficult to shop for clothes due to dressing rooms being closed.
“I definitely think it’s due to online shopping, it’s just much more convenient,” she said Wednesday. “Depending on our community’s preferred shopping experience, I think every business is going to have to adapt and evolve to be able to satisfy those constant needs within their business model.”
Contact Sierra Henry at 309-820-3234. Follow her on Twitter: @pg_sierrahenry.