St. Charles! You’re about to be mauled by a mall

Why is it, like an inebriated Texas hold ’em player, municipal bodies never seem to know when to cut their losses? I understand we frail humans have a hard time letting go of things, but aldermen really oughtta know better.

The most recent example of this special lack of foresight comes at the hands of the St. Charles City Council who, despite an all too obvious DNR order, believe they can bring the Charlestowne Mall back back to life. And you thought Dr. Frankenstein faced a daunting task! charlestowne2

Giving a new definition to the word “optimist,” that group is willing to bet $20 million in sales tax receipts – the largest incentive package ever offered by the city – that it’s gonna happen.

And the folks who purportedly will bring it to pass, Krausz Companies of San Francisco, want to downsize and rework the virtually empty mall, renaming it, “The Quad St. Charles.” Yikes! That doesn’t exactly say “retail” to me. It sounds a lot more like something you’d find on a college campus.

Despite all that wishful thinking, it isn’t going to happen and here’s why:

1. The mall concept is dead. That’s especially true of indoor malls which were never a great idea to begin with. And you’d think St. Charles would’ve learned from the west side St. Charles Mall debacle. The crown jewel of Fox Valley retail, the Geneva Commons, has never lived up to its expectations having gone into default in 2013. One local official told me that, though they’ll paint a pretty picture, considering the vast concessions, the Commons has become a huge albatross hanging around the City of Geneva’s outstretched necks.

2. The big box store concept is dead. Most malls rely on “anchor stores” to attract smaller tenants and their day is rapidly fading. We’ve already lost Circuit City, Borders, CompUSA, and Blockbuster. Now Sears, J. C. Penney, K-Mart, Best Buy, and Barnes and Noble are in their death throes. So why pay a huge mall rent when there are so many storefronts already available? The vast irony is that Charlestowne has actually managed to hold onto Von Maur, Carson Pirie Scott, and Kohl’s, but their vacancy rate still sits at a lofty 90 percent.

3. The plan won’t work. Though Krausz appears to have a decent recovery track record, will someone please tell me how downsizing the mall, adding “out-buildings,” creating a more “town square” look, and giving it a really bad name will attract new retail? Developer Dan Krausz, a master of understatement, told the city they needed that  extra cash to offset the “negative goodwill” the site had already earned. Good luck with that!

4. The Internet’s still here. This project is already behind the eight-ball before the first shovel hits the ground. Brick and mortar stores continue to fail to grasp the concept of customer service and they don’t understand how to use the power of instant gratification. Thus, the Net will continue to chip away at local retail with every breath we take.

5. Randall Road is still there. Though they have their own problems, it’s still some serious competition.

6. The market always has the final say. I’ve said it before. If the market could bear the kind of development we’re discussing, it would already be there. This is why TIFFs generally fail. Politicians just love to wax poetically about the “free market” until it kicks them squarely in the ass. And, for all the reasons we’ve already mentioned, it’s about to do just that to St. Charles.

So even as the housing market makes a major rebound, it won’t stop the city council from eagerly applying their rose colored glasses and unanimously approving a plan to keep this comatose patient on life support.

I wonder if I could con ’em into a poker game?

 

 

4 thoughts on “St. Charles! You’re about to be mauled by a mall

  1. My whole family looks forward to the new development. Your very negative. You should realize the mall was not doing terribly til a new owner kicked out all the tenants he could to pursue making it outdoor, then the economy hit him over the head. If you noticed the traffic flow to the theatre you would see that the community wants to shop there and has the demographic to support it. Also, with our unpredictable weather give me a indoor option ! The name is funny , but who really cares?

  2. A few points in favor of an indoor shopping mall. 1st, the Internet will never replace brick & mortar. People want to touch and try on things. 2nd, people prefer 1 stop shopping, which explains Super Walmart, Super Target, and an Indoor Mall is bigger with more choices than either. The success of Walmart & Target is due to pricing rather than convenience. I’d take an indoor mall shopping experience over a Walmart trip in a heartbeat! I also prefer an indoor mall to walking from store to store in someplace like the Arboretum (especially in Winter or bad weather). The trick to success & profit in competition is providing Value rather being the low cost provider. That value may be found in lots of ways. It could be vanity, the mall can be more prestigious than Walmart. After all, people buy luxury cars. It could be customer service. People will pay more if there is a sales clerk that is available, knows the product, and is nice to people. It could be convenience in bundling a movie theatre, fine dining, or other attractions to your shopping day. There are lots of ways to bring value.

    Randall Road is a success today because of traffic count & the lower cost of building out on former farm land. These factors may be fleeting. As each stoplight is installed, the time it takes to travel on Randall increases. Eventually, it is like a downtown and no one drives there anymore.

    For an indoor shopping mall, that means making it a desirable destination. Woodfield Mall is a roaring success; the size, scale & diversity of stores appeals to a broad range. There’s a lot of niche stores you won’t find elsewhere. I love the Lego store. SpringHill mall has a play area for kids. My kids love the mall because of that. The St. Charles mall is a beautiful structure and can have those same ingredients. The names of anchor stores may change, but big box isn’t dead. Maybe they get a Home Depot instead of a JC Penny’s.

    St. Charles mall went through a negative feedback loop. Losing tenants begets losing more tenants. That’s a hard truth. Equally true is that positive feedback loops work as well. As you add value and content, you gain more and more shoppers. I wish the luck with the re-development and will give them a try once they have tenants again.

  3. Todd, Would you mind if I put this up on the blog as a contrasting view?

    • Sure. I don’t think you’re contention that Malls are under stress is wrong. Retail has to transform to adapt to our rapidly changing society. I just think Malls will survive; the basic premise is good IMHO. The effects of the 2008 recession have left a lot of people more pessimistic than they should.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s