Grand Avenue shows signs of life

After years of decline with high vacancy rates and a dwindling number of shoppers, The Shops of Grand Avenue in downtown Milwaukee is finally showing some signs of life.

Unable to attract new national retail tenants and struggling to maintain its existing tenants, mall management has tried some innovative programs to fill the mall’s retail space.

Through the Creativity Works Here program, beginning in 2011, the mall has attracted artists, creative companies and entrepreneurs, including Spreenkler Creative, to occupy space on the eastern end of the mall in the Plankinton Building.

Then in 2012 the mall launched its Pop Up program offering short-term, low cost leases to attract small retailers to make a go of it in the mall, especially during the holiday shopping season.

The Pop Up program has attracted 13 tenants occupying a total of 28,500 square feet of space in the western half of the mall. The Pop Up tenants are: Jake’s Deli, Renaissance Books, Sachen Contemporary Imports, Ayzha Fine Arts, Bella Baby Boutique, Boss Chick Clothing, Christmas House, Cierra’s, Cream City Soap Co., Embellishments, Flagship, Nikavonni’s and Sports World.

Nikki Stephens, an owner of Nikavonni’s (men’s clothes and shoes) and Cierra’s (women’s shoes), said her stores have done well at the mall.

“Business has been going very well,” she said. “I think we’ll be here for the long haul. It’s been better than expected. (Business activity at the mall) is starting to pick back up. It’s still the Grand Avenue Mall. It doesn’t have the touches that it used to, but there is still good (foot) traffic with people going to lunch and that nature.”

The Pop Up leases vary from three months to a year, said Tracy Korpela, marketing and specialty leasing director for The Shops of Grand Avenue. She declined to disclose the Pop Up lease rates but said they are “below market rents.”

The mall now only has one 1,200- square-foot space available for lease in the western half of the mall. The total amount of retail space in the mall is 258,000 square feet. The anchor tenants in the mall remain Boston Store and TJ Maxx.

However the eastern half of the mall still has a large amount of vacant space, including the former Linens ‘n Things and Old Navy spaces.

But the new Pop Up stores have helped to boost foot traffic, especially in the eastern half of the mall, Korpela said.

“We have definitely seen an increase in shopper traffic as a result of Pop Up,” she said. “If you think about it, the new stores each have their own social circles, families, friends, support teams and their own social media networks that they utilize, which all brings extra traffic to the mall. When you couple that traffic with our daily built in traffic, and our holiday event traffic, it is significant. We have had two solid weekends that are double the traffic we saw last year. People are extremely curious and they want to see the ‘new’ Grand Avenue Mall. It has been quite fun.”

But it remains to be seen if the Pop Up tenants will be successful long-term in Grand Avenue and if the concept can lead to a turnaround for the long-struggling downtown mall.

“(The Pop Up program) is a solution to the problem,” said Cory Sovine of Siegel-Gallagher. “Whether it’s the solution to the problem remains to be seen. It’s progress, getting people back in there. But it’s too early to tell.”

Other struggling malls in the U.S. have tried initiatives similar to the Grand Avenue Pop Up program and the Creativity Works Here program, Sovine said.

“It’s definitely something we are seeing on a national basis,” he said. “Owners are doing anything they can to fill vacant spaces, including renting to nontraditional tenants.”

It remains to be seen how successful the Pop Up stores will be and whether or not they become long term tenants at the mall, Sovine said.

“The first generation of Pop Ups, how they perform will be very telling if it’s a long term solution for the owners,” he said. “If they enjoy tremendous success, they will likely sign on as a permanent tenant. If you see them renewing with longer term leases, that will be a big sign that it’s working.”

Meanwhile, the ownership of the mall remains in flux. In October, the mall was sold in a foreclosure action to 275 West Wisconsin Holdings LLC for $8.5 million. 275 West Wisconsin Holdings is a subsidiary of the mall’s lender, a group of Bank of America investors.

The sale price for the mall was a dramatic drop from the $31.7 million price that it was sold for in 2005.

The new ownership group will likely also try to sell the mall to recoup some of its investment. As the sale price for the mall keeps falling, perhaps an owner will acquire it that will finally be able to take advantage of a low up-front investment to turn the property around.

“If you get it cheap enough anybody can make it work,” Sovine said. “If you offered Grand Avenue to me for one dollar I can figure out how to make it work. The question is, what is that price?”

The Pop Up program could make it harder to sell the mall because financial institutions prefer to see tenants in place with long term leases, Sovine said. That could limit potential buyers to entities that have cash and will not rely on financing.

The fate of the Boston Store will be crucial for the retail future of Grand Avenue, Sovine said. The Bon-Ton Stores Inc., which has its headquarters in downtown Milwaukee and York, Pa., has kept the store open despite the struggles and store closures at the Shops of Grand Avenue but some worry about what would happen if it closed the Boston Store there.

“As Boston Store goes, so goes the mall,” Sovine said. “If Boston Store pulls out, it would be incredibly damaging.”

One Boston Store employee said the addition of the Pop Up stores at the mall has had little effect on the Grand Avenue Boston Store.

“It’s great we have the Pop Up stores but they aren’t national brands,” said the employee, who declined to speak on the record. “(The store is) seeing a little increase in traffic over the lunch hour, but not an increase in sales. Sometimes it takes a while for customers to realize there are other stores (in a mall).”

With new ownership in place, Mid-America Real Estate was recently named the new manager and leasing agent for the Shops at Grand Avenue, taking over from Jones Lang LaSalle, which previously managed the mall’s operations.

“We’re just starting to dig into it to see what strategy we need to employ,” said Mid-America principal Dan Rosenfeld.

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