ELYRIA — Elyria’s Midway Mall is a brick-and-mortar giant that doesn’t offer what shoppers want and has nowhere for young professionals to work and live. If it’s to survive, Midway Mall needs to find a new owner and an eager developer willing to transform it from an old enclosed mall of yesteryear into a new town center-like attraction that could brings in millions of dollars of fresh retail revenue.
It’s no surprise Jeff Green Partners and the Hoffman Strategy Group would make such a recommendation to city officials as the highest and best use possible for the mall. Lifestyle or town center-like shopping hubs are trending in the retail world with developers seeing the value in blending shopping, residential, hospitality and office space into the same area.
Bring in the wrecking ball
But first, the mall has to shrink — big time.
Right now, it’s about 1.1 million square feet of space under the mall’s roof.
The Elyria market can support about half that or roughly 530,000 square feet, said Jeff Green. Add in new high-end apartments, another hotel and more office space and Midway Mall has the potential of being a baby Crocker Park.
“The mall is doing about $70 million annual in sales, but at half the size and with the right mix it could do about $160 million in sales. This is about right-sizing a mall that is just too big.”
Green said Midway Mall does have something other similar sized malls do not have and that’s access to three major thoroughfares —Interstate 90, the Ohio Turnpike and state Route 57. They provide the travel arteries that make getting to the mall easy for consumers.
But shoppers have to have something to do, see and buy once they get here.
“Everyone is shopping value right now, not just the down market shopper,” Green said. “Expanding value-oriented retail like that of TJ Maxx and Gordman’s while leaving J.C. Penney as the anchor is the way to go.”
Elyria and Lorain County are losing millions because its retail centers don’t draw shoppers like Westlake’s Crocker Park, SouthPark Mall in Strongsville and North Olmsted’s Great Northern Mall. The net annual loss is about $890 million in retail sales leaving the county each year.
“The goal we have to look toward is recapturing those lost retail sales by finding the best retail size and putting what works around the rest,” Green said.
The future of retail
Green and Jerry Hoffman, head of the Hoffman Strategy Group, presented their findings to City Council on Monday night.
“I am truly glad we are having this conversation, because too many people in my ward want to know what is going to happen with Midway Mall,” Councilwoman Brenda Davis, D-2nd Ward.
City officials eagerly accepted the assessment as a step in the right direction and wanted to know what they could do to spur the plan along.
“Look at Great Northern Mall. That mall is just exploding when Midway is not,” said Councilwoman Donna Mitchell, D-6th Ward. “What are they doing that we are not doing?”
Mitchell did not dismiss the idea of a major demolition of the mall to make way for a new shopping center but questioned why North Olmsted was not going that route if it’s so trendy.
It will only be a matter of time as nearly all enclosed malls hit a downturn when they have too many stores chasing too few shoppers, Green said. A class A mall like Beachwood Place with its high-end retailers have the staying power to be shopping meccas.
Still, the “future of retail,” he said, will be in mixed-used centers. Think Crocker Park, Legacy Village, a stone’s throw from Beachwood Place, and the Shoppes at Parma, which was once ParmaTown Mall in the heart of Parma.
“SouthPark has seen its struggles over time, too,” Green said.
A story to tell
While Mayor Holly Brinda commissioned Green and Hoffman to come up with the Midway Mall plan — it cost taxpayers about $49,500 from the salary of the unfilled economic development specialist position — the plan mainly will be that of a selling point to anyone willing to invest in the mall’s potential. The city does not own the mall.
Midway’s management partners, The Woodmont Co., a Texas-based asset management company, and LNR Property, a Florida-based real estate investment and management company, both see revitalizing Midway Mall as not something for them to accomplish as asset managers but to entice the next owners. Midway Mall is stable and far from closing. But it’s also a bank-owned property that is on the market.
At least now Midway Mall has a story to tell potential buyers, said Fred Meno, president and CEO of Asset Services for Woodmount.
“A property without a story to tell will attract a bottom-feeder type investor,” Meno said. “When that happens, nothing appreciative happens at a property that I have seen from my experience.”
Yet, when a lender goes to market with an asset that has a story to tell or when the lender is able to market a dream, a buyer sees value, Meno said.
Elyria could sweeten the deal with even more value in the form of creating a tax incentive package even before a buyer is found, Councilman Mike Lotko, D-at large, originally suggested Monday night. However, Brinda pulled him back from that thought by saying the city would be better positioned if it waits until a buyer is on the hook.
Mall buyers and sellers
To get an idea of who would buy the mall, Elyria can look no further than Richmond Town Square Mall in Richmond Heights.
Crain’s Cleveland Business reported Monday that the mall sold for about $7.25 million. The new owner is Kohan Retail Group based in Great Neck, N.Y. The group paid cash for the mall with Mike Kohan, the owner of Kohan Retail, telling the business publication he plans to fill vacancies, but has no other redevelopment plans for the property.
The $7.25 purchase price is significantly less than the assessed market value of $24 million.
Rolling Acres also has a relatively new owner, but this time it’s the city of Akron.
The mall sat vacant for eight years and when it recently went up for auction this summer at a second and final sheriff’s sale, no one bid on the property. As a result, Summit County filed an order of forfeiture so the city of Akron could acquire it with all back taxes cleared.
Mayor Dan Horrigan called the transfer “movement” with a property that was stagnant for too long.
The city wants to come up with a long-term plan that will most likely include demolition.
At least one developer reportedly approached Akron with an idea to turn the former mall into a massive youth sports complex, but city officials nixed it.
City has plans, too
Giving the plan to the mall’s asset managers is not the only thing the city can do. Brinda said the city will be able to use the plan to leverage outside economic development funding and guide future decisions about zoning and economic development incentives to property owners and developers.
“This is a great tool for us, too. What we don’t want to do is put taxpayer dollars behind a project that data has said won’t work,” Brinda said.
The plan and supporting data give the city leverage as well as sound reasoning as to why it should offer incentives or even embrace developers’ ideas.
“If they propose something that we don’t think is going to work, we can say ‘no,’” Brinda said.
The plan worked in that regard with Brinda’s hope of an outlet mall, which was echoed by Councilman Jack Baird, R-at large. Green and Hoffman said the market has too many outlet malls already.
Green did not put a price tag on how much redevelopment would cost or what it would do to the value of the property.
“I’m not saying what a potential buyer would do. That’s not in my wheelhouse,” he said. “But this is me saying what could go there based on the data we have available.”
Highlights of highest and best uses plan
- The retail world — The biggest proposed change to Midway Mall comes in the type and configuration of the actual mall and shopping in the area.
The good news is Green said a new shopping destination could bring in $90 million annually in new retail sales revenue. But to get there the best option a developer has for the property includes razing about 80 percent of the existing mall and building a town center-style shopping destination around J.C. Penney, which would serve as the anchor.
J.C. Penney may be underperforming as a store now, but the lack of foot traffic at the mall is a huge factor as the fashion retailer nationwide is doing a good job of retooling for today’s consumer. In Elyria, it just needs a better retail hub.
This new town center-type development should be roughly half the size of the current mall or about 530,000 square feet and feature restaurants, entertainment and value-retailers like Gordman’s, which only has three stores in the region and four overall in Ohio, and TJ Maxx. A movie theater like Alamo Drafthouse or Studio Movie Grill, two first-run cinemas with little to no Ohio saturation that offer restaurant-style food and cocktails, and Round 1 bowling will give the center a recreation/amusement component.
Rounding out the center would be achieved by attracting new tenants as well as encouraging retailers like PetSmart, GameStop, Buffalo Wild Wings and Chipotle to leave the strip malls in favor of the new shopping town center.
What the proposal does not include is a Sears store, given what is happening to Sears on a national level.
Green said Sears as a corporation is struggling to retain its footing in the retail industry.
- Live it up — Millennials want to live where they shop, but Elyria is lacking places they would want to live.
There are no high-end apartment complexes that boost small living, top-notch amenities and easy access to retail and entertainment.
“Most millennials are still under 34, many are not married and they want a more mobile lifestyle,” said Hoffman. “They are not buying homes or are buying homes much later in life.”
The area can support up to 240 new Class A, market-rate apartment units.
The apartments can be built in phases with 120 units in each of two phases over the period of 2017 to 2025.
- A hospitality industry — Elyria has hotels and motels, but it could use another.
When you think about the quality of hospitality offerings in Elyria, the choices for guests range from the motels along Lorain Boulevard to Days Inn (the former Ramada Inn) near Midway Mall and Hampton Inn, which opened in 2013. A 108-room Courtyard by Marriott is under construction.
Hoffman said the market needs another — possibly an 80-room Best Western Plus or another similar limited-service, upper-midscale brand — by 2020.
- Work close by — Those in the finance, banking, insurance, real estate and professional and business service industries need a place to work, and Midway could be that place.
Elyria has a limited stock of office building inventory suitable to new business development. As such, Hoffman said the area could support about 260,000 square feet of Class A office space to be built over a period of 10 years at 30,000 to 35,000 square feet a year.
It would give the young millennial places to work that have green space and walkability as well as close proximity to restaurants and entertainment.
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