Regency Mall, the only enclosed shopping center in Racine, is facing significant challenges that threaten its future.
Sears closed its Regency Mall store in January and JCPenney announced that it will close its store at the mall in the first quarter of 2015. The Sears store closure leaves an 89,119-square-foot vacant space at the mall. JCPenney occupies a 149,196-square-foot space.
The mall has two other anchor stores, a 105,869-square-foot Boston Store and an 80,000-square-foot Burlington Coat Factory store.
The 810,337-square-foot mall, built in 1981, has 110 stores, but 14 of those are vacant, in addition to the Sears and soon to be closed JCPenney stores.
“Regency Mall is not a strong shopping destination,” said Ross Koepsel, a partner with Commercial Property Associates Inc., a Milwaukee-based retail real estate brokerage firm. “The mall itself has struggled for the last 10 years.”
“It’s in some serious trouble,” said John Kuhn, principal with the retail properties group of Milwaukee-based Siegel-Gallagher.
“It was in trouble 20 years ago,” said Kevin Riordan, principal and retail team leader for Milwaukee-based The Boerke Co. “I don’t get too many tenants saying that’s where they want to be.”
With one anchor tenant gone and another on its way out, it is reasonable to wonder about the future of the Boston Store at Regency Mall. The Bon-Ton Stores Inc., the Milwaukee and York, Pa.-based parent company of Boston Store, has not turned an annual profit since 2010 and reported losses of $31.5 million in the first quarter of fiscal 2014 and $36.2 million in the second quarter. Recently, Bon-Ton announced plans to close some stores, including its Bon-Ton store in Butler, Penn., its Elder-Beerman store in Beckley, W.V. and its Carson’s Fox Valley Furniture Gallery in Naperville, Ill. The company also closed its downtown Sheboygan store earlier this year, but still has a Boston Store location in nearby Kohler.
As Bon-Ton works to improve its performance, will it maintain its store at Regency Mall? Riordan predicts Bon-Ton will close more stores in struggling malls, including the Boston Store at Regency Mall.
“It will probably be next on the list,” Riordan said. “To me, it’s just a matter of time before they do it.”
Sears and J.C. Penney are also struggling with major losses and are closing several stores, not just those at Regency Mall. Sears recently said it will close its store in Sheboygan at Memorial Mall, another struggling shopping center, and in December it will close its store at Bayshore Town Center in Glendale.
Regency Mall is located northeast of Durand Avenue and Green Bay Road. Green Bay Road is the main retail corridor of Racine. Kmart, Home Depot, Best Buy, Office Depot, Dick’s Sporting Goods, Pick ‘n Save, Barnes & Noble and Toys R Us all have stores along Green Bay Road near Regency Mall. Target has a store near Durand Avenue on an outlot of the mall property, but it is separate from the mall.
National retail chains seem to be more attracted to the area around Regency Mall than the mall itself, Koepsel said. Across the street from Regency Mall, the 163,252-square-foot Regency Point Shopping Center has only one 2,500-square-foot vacancy. Tenants include Hobby Lobby, TJ Maxx and Bed, Bath and Beyond.
Some tenants prefer strip malls like Regency Point because they provide more visibility to people driving by than enclosed malls like Regency Mall, Koepsel said.
“In the case of Regency Mall, history has proven that being inside the mall is not the best strategy (for tenants),” Koepsel said. “A lot of retailers have realized they are better off being in other shopping centers than being in the mall.”
Regency Mall is located too far away from the interstate to be a regional destination and Racine’s population on its own is too small to support the mall, Riordan said.
“There’s just not enough people to handle the amount of retail that’s down there,” he said. “Malls generally have to be accessible to a lot of people and just off the freeway.”
Racine’s economy has struggled for years with a loss of a significant amount of its manufacturing base, and that has also hurt Regency Mall, Koepsel said.
“Racine seems to be hit harder by economic downturns,” he said.
“The good national tenants, they want to be at Mayfair (Mall in Wauwatosa), Brookfield Square, (and other) high sales per square foot malls,” Riordan said. “(Regency Mall) will probably never get to that position.”
J.C. Penney Co. Inc. recently sold its Regency Mall store property to an affiliate of Northbrook, Ill.-based Learsi & Co. Inc. David Israel, president of Learsi & Co., said the firm plans to split the JCPenney store building at Regency Mall into smaller spaces for smaller stores.
“We think it’s the best real estate on the mall,” Israel said. “It’s the best corner. It’s right at the heart of all the other retail (in Racine).”
“(Learsi & Co. has) a good track record of purchasing struggling assets and turning them around,” Koepsel said.
Regency Mall is owned by Chattanooga, Tenn.-based CBL & Associates Properties Inc., one of the largest mall owners in the U.S. That strong ownership could help turn Regency Mall around.
“I’m sure they know as well as anyone what they need to do to keep it viable going forward,” Koepsel said. “It’s going to take investing some money into the mall.”
The last major renovation at Regency Mall was completed in 2000, according to CBL’s website. A spokesperson for CBL could not be reached for comment.
Racine Mayor John Dickert said he has not been in contact with CBL about the struggles of Regency Mall.
“With all of the things I have to do, (the fate of Regency Mall) is not on the top of my priority list,” he said.
Dickert said he would be open to consider any ideas presented by CBL to improve the mall.
“If there’s a change in the mix, we’d be happy to talk to them about it,” he said. “Maybe it’s time to reinvent the mall. Maybe it’s time to reinvent the area.”
Regency Mall needs to add non-retail tenants like fitness centers or entertainment venues to get more foot traffic in the mall, Koepsel said.
“It’s struggled to just be a retail destination,” he said.