Regency Mall’s final chance

Real Estate

Hull Property Group purchased Racine’s Regency Mall for $9.6 million in December, promising to turn it around.

Last summer, nine store spaces in Racine’s Regency Mall were converted into an 18,000-square-foot Planet Fitness.

The health club was a welcome addition; seven of the spaces it occupies had been vacant and Regency’s owners were hopeful the foot traffic into the gym would help revitalize the long-struggling mall.

Hull Property Group purchased Racine’s Regency Mall for $9.6 million in December, promising to turn it around.
Hull Property Group purchased Racine’s Regency Mall for $9.6 million in December, promising to turn it around.

Things are going well for Planet Fitness, according to company spokesman Brice Scholz. While he wouldn’t say how many members the Regency Mall location has, Scholz said there are new members joining every day and it was a good decision to locate inside the mall.

“This is the largest mall we are in, but we also recently opened in East Towne Mall in Madison,” Scholz said. “We look for new retail opportunities all the time.”

As retailers continue to struggle, some mall landlords are looking for non-traditional tenants like Planet Fitness to fill space.

John Kuhn, principal with Milwaukee-based The Boerke Co., said in the past, malls owners would never have considered service or activity users. Now, they are aggressively looking for them.

One of Kuhn’s clients, Adventure Rock, has two locations, in Milwaukee and Brookfield, and is being asked constantly by mall owners from across the country to open rock climbing locations in their malls.

“Ten or 15 years ago, (the mall owners) wouldn’t have returned a phone call,” Kuhn said.

In December, longtime owner Chattanooga, Tennessee-based CBL & Associates Properties Inc. sold Regency Mall to Augusta, Georgia-based Hull Property Group for $9.6 million as part of a three-property acquisition.

At the time of the purchase, James Hull, managing principal of Hull Property Group, said in a written statement that the three malls purchased were not reaching their full potential and the first step would be working with community leaders and surrounding property owners to determine how the overall retail corridor can be improved.

A strip mall across the street from Regency Mall is currently vacant.

“There is a lot of work ahead, but we are long-term owners and want to invest the time to get to know these communities and understand the best path forward,” Hull said in a written statement.

Representatives from Hull did not respond to numerous interview requests for this story.

They did meet with Racine County Executive Jonathan Delagrave and his team recently and shared some details about how they plan on turning the mall around.

Racine County receives sales and property taxes from the mall. The county was unable to provide information about how much tax money it receives annually from Regency.

Delagrave is optimistic the mall can be revitalized.

“I really like what we’ve heard from the new owners,” he said. “They are hoping to turn this into a destination mall with high-end, quality stores and services for customers and we are pretty excited.”

The Limited, one of the mall’s original stores, closed in December.
The Limited, one of the mall’s original stores, closed in December.

Hull did not give the county a timeline for the transformation, but Delagrave said the company is in tune with retail trends. Regency Mall will remain a mall, but the definition of what that looks like, which stores will be included and how people access those stores could change.

“I think their model is stabilize, reform and transform,” Delagrave said. “I hope to see the fruits of their labor within the next calendar year.”

Built in 1981, the 810,337-square-foot mall has struggled for several years to retain quality tenants. Sears closed its 89,119-square-foot store in 2014, and JCPenney did the same the following year, closing its 149,196-square-foot store.

Regency has been able to hold on to its other two anchor stores, the 80,000-square-foot Burlington Coat Factory store and a 105,869-square-foot Boston Store. Ross Dress for Less and Jo-Ann Fabric and Craft stores also have opened at the mall.

Shortly after the sale to Hull was announced, The Limited, one of the mall’s original stores, closed as part of the chain’s decision to shutter nationwide.

In January, Regency lost three more stores, Payless Shoe Source, Payless Kids and Claire’s. The jewelry store was another one of Regency Mall’s original stores.

One bright spot was Bob’s Discount Furniture, which entered the Wisconsin market with three stores in February and opened one at Regency Mall in the 25,000-square-foot space left vacant by H.H. Gregg Appliances in October.

Many of the problems at Regency Mall are symptomatic of what is happening across the country in the retail industry as shoppers’ buying habits have shifted online.

According to the Wall Street Journal, mall landlords are walking away from struggling properties, leaving creditors behind. From January to November 2016, 314 loans secured by retail property were sold off, up 11 percent from the same period in 2015, according to the Journal.

CBL, the former owner of Regency Mall, unloaded 14 properties by selling eight and handing six over to lenders. One of those malls returned to lenders was the Wausau Center mall in Wausau, which lost two of its three anchor tenants.

Wausau Mayor Robert Mielke told the Wall Street Journal CBL didn’t do enough marketing or maintenance to keep the mall viable.

Often, companies like Hull Property Group come in and buy the malls in foreclosure sales. Hull bought five malls in foreclosure sales in 2016.

And while Regency Mall was not in foreclosure, it is no secret the mall has struggled.

In 2014, BizTimes published an article titled “Racine’s mall is in trouble.” At that time, Kevin Riordan, principal at The Boerke Co., said: “It was in trouble 20 years ago. I don’t get too many tenants saying that’s where they want to be.”

Whether Hull can turn Regency Mall around now that CBL is out of the picture with its “stabilize, reform and transform” model remains to be seen.

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