New mall owner optimistic
STEUBENVILLE — The Fort Steuben Mall’s new owner concedes that turning its sinking fortunes around isn’t a job for the faint of heart.
Two of its anchor stores, Macy’s and Sears, are long gone, as are a host of smaller shops. Basic maintenance, such as roof repairs and carpet replacement, is long overdue. And shoppers? Too many of them have gotten in the habit of looking elsewhere for the items they need.
But Mike Kohan, owner of the New York-based Kohan Retail Investment Group, said those are precisely the qualities that made the decision to purchase the mall a no-brainer. The loan servicer approached him with the opportunity after the previous owner defaulted, and Kohan said he wasn’t in a position to say no.
“We can’t have choices at this point,” Kohan said. “If you want to buy some asset you have the opportunity to revitalize, these are the kind of opportunities (you get). You can’t argue assets, you can’t argue locations — basically, you have to be ready for any location, any time. If our operation is to deal with revitalization of malls, we can’t just go back and tell (sellers) we don’t like the location. … Then we’d want to be choosers and in this business, a chooser is not going to get much.”
KRIG paid $10.75 million for the mall property, which does not include the roughly 132,000-square-foot space that had been occupied for more than four decades by Macy’s and its predecessor, Kaufmann’s Department Store. Miami-based Lionheart paid $530,000 for that space at an online auction in June. KRIG now has 28 malls in its portfolio, all of them at one time or another fitting the “distressed” label.
Kohan said his company’s formula is simple: Re-tenanting distressed malls, addressing deferred maintenance and inviting “smaller local tenants” who never had the opportunity to locate in malls to “come in and be part of (one.)”
“All over the country we have servicers offering us malls,” he said. “In some cases we’re making headway and have actually been successful bringing in tenants; in some cases, we’re making less. We’re not developers, we’re not knocking down malls and building multi-units, though we have developers who have done that — they’ve taken part of our lots and turned them into units.”
Kohan said the important thing is to get people into the habit of coming to the mall again, and the best way to do that is to make it a true community center — invite small, locally owned shops to join the mall family, host community events and find ways to boost foot traffic, since that will build momentum and attract more and bigger tenants.
“We consider everyone as a viable tenant,” he said. “We have to start with something, we can’t just go national now. They need to see a story, they need to see what our plans are. We need to be able to show them seven or eight local tenants who are generating traffic, generating a mix of retail. That could be a good story to take national.”
With Steubenville, “we’re looking at multi-purpose (uses), bringing in medical offices, professionals, accountants … anything that could generate traffic.”
“That’s what the plans are. It’s actually worked in many other locations, and we’ve been able to bring in larger tenants, national tenants,” he said, pointing out it’s not fail-safe. “There are challenges we have on a daily basis.
“The challenges of a Sears going bankrupt, of closures happening every year with different national tenants, the challenges of renegotiating leases — we have all those challenges on a daily basis, but we still have to make malls a destination for shoppers so we won’t have as many closures, won’t have renegotiations and sales are up to what’s acceptable. It’s crucial for us to keep that traffic (increasing) by creating some events, by bringing entertainment in that will add to traffic. … Maybe we can get parents to come in and bring their kids to play in an arcade or whatever. Then while parents wait for their kids, they can walk around and shop or go eat.
“The more people who go there, the better it is for all vendors. We consider all stores our partners, so we have to create traffic and that’s what we’re aiming for. We’ve done that before — we’re not 100 percent successful, but we’ve had some success.”
The Fort Steuben Mall is “pretty distressed,” he noted.
“We have to make it a priority, to jump on it and make it a really good destination for shoppers. We have quite a challenge in front of us but we’ve done it before, so it doesn’t discourage me at all.”