Park Plaza Mall

[Architect]

On 12/17/2019 at 2:35 AM, theman said:

Gap announced earlier this year that it would close 230 stores by 2020. It seems that these will be focused on their mall based stores not their outlet stores.

The retail landscape is changing quickly because of online shopping. Malls are going to have to adapt with more entertainment, restaurant or office tenants or die.

Losing Gap, Banana Republic, Express and New York and Company is going to be a big blow to Park Plaza. I wonder if they have any potential tenants interested in any of that space?

Rumors of Banana Republic closing may have been premature...there was an article in the DemGaz in Friday's paper about the Gap store closing, so I emailed the journalist to ask about BR, and they said corporate didn't say anything about it.  Also, when I was there, it definitely seemed like everything was operating normally, unlike the Gap store where it was apparent with the merchandise and signage that it was closing.

p.s.  The article said that Gap closed their Rogers Promenade store last month, and that the only store left in the state would be the Factory Gap at Outlets of Little Rock

[SigmaGuy]

These are huge losses for Park Plaza.  I don't think it recovers.  Retail is too fragmented in Little Rock.  In most markets this size, stores like Banana Republic, Pottery Barn, Apple, etc. are in a single center.  My guess is that some of them under perform.    My hope is that over time The Promenade picks up some of the stores that left the market. Something is off when Fort Smith and Fayetteville have an Abercrombie & Fitch and Little Rock doesn't.  With these recent announcements Metro LR will not have BR, Gap, Express, Abercrombie & Fitch, Hollister, etc.  I had hoped Park Plaza/Midtown would be the dominant retail corridor in the market but I feel like The Promenade is establishing itself as the best hope for higher end, national brands. LUSH Cosmetics is opening a store there so that's a good pick up for the region.  Time will tell.          

[Architect]

6 minutes ago, SigmaGuy said:

These are huge losses for Park Plaza.  I don't think it recovers.  Retail is too fragmented in Little Rock.  In most markets this size, stores like Banana Republic, Pottery Barn, Apple, etc. are in a single center.  My guess is that some of them under perform.    My hope is that over time The Promenade picks up some of the stores that left the market. Something is off when Fort Smith and Fayetteville have an Abercrombie & Fitch and Little Rock doesn't.  With these recent announcements Metro LR will not have BR, Gap, Express, Abercrombie & Fitch, Hollister, etc.  I had hoped Park Plaza/Midtown would be the dominant retail corridor in the market but I feel like The Promenade is establishing itself as the best hope for higher end, national brands. LUSH Cosmetics is opening a store there so that's a good pick up for the region.  Time will tell.          

I completely agree with the LR retail center market fragmentation that regrettably happened about ten years ago (MidTown, Pleasant Ridge, Park Avenue, Shackleford Crossing, Promenade - maybe if only TWO of these had been developed instead of all five)...that's been discussed ad nauseam on these forums.  Like you, I had hoped that between Park Plaza (which has held its own very well for sixty years) would hold its own, counter balanced by west LR...this will be tough on them, but the presence of a solid department store like Dillards will help.

However, the deal with A&F is just a timing issue...their lease at Park Plaza was up before it was in Ft. Smith or Fayetteville.  I've been told the NWA Mall is in bad shape, and for the record, the Gap and BR in the Roger's Promenade have also closed.

[Aleck]

2 hours ago, SigmaGuy said:

These are huge losses for Park Plaza.  I don't think it recovers.  Retail is too fragmented in Little Rock.  In most markets this size, stores like Banana Republic, Pottery Barn, Apple, etc. are in a single center.  My guess is that some of them under perform.    My hope is that over time The Promenade picks up some of the stores that left the market. Something is off when Fort Smith and Fayetteville have an Abercrombie & Fitch and Little Rock doesn't.  With these recent announcements Metro LR will not have BR, Gap, Express, Abercrombie & Fitch, Hollister, etc.  I had hoped Park Plaza/Midtown would be the dominant retail corridor in the market but I feel like The Promenade is establishing itself as the best hope for higher end, national brands. LUSH Cosmetics is opening a store there so that's a good pick up for the region.  Time will tell.          

There is still Express, Gap, and Banana Republic stores at the outlet mall, so these stores will not be gone from the market fully. But I agree that there are too many competing large scale shopping centers in the metro area.

[LRretail]

Construction on new shopping options just south of the Doctors Building on University should also be noted.  It will be difficult for Park Plaza to retain tenants in an indoor mall setting.  The combination of significant changes in consumer behavior towards online retail and newer facilities giving those brands that still garner in person foot traffic better options to serve their customers will prove difficult for Simon Malls in general thus Park Plaza.  But the declines similar to what Park Plaza is going through have occurred at an accelerated rate in other metro areas and is purely a reactionary result to trends that are more than a decade old.  There were those of us that wanted the newer developments just as bad as those of us that wanted things to remain the same.  Arguably the demand for retail space did not keep up with the growth of newer facilities.  But for sure the other options have had a profound impact on Park Plaza itself.  It's held up well nonetheless.  

[Architect]

36 minutes ago, LRretail said:

Construction on new shopping options just south of the Doctors Building on University should also be noted.  It will be difficult for Park Plaza to retain tenants in an indoor mall setting.  The combination of significant changes in consumer behavior towards online retail and newer facilities giving those brands that still garner in person foot traffic better options to serve their customers will prove difficult for Simon Malls in general thus Park Plaza.  But the declines similar to what Park Plaza is going through have occurred at an accelerated rate in other metro areas and is purely a reactionary result to trends that are more than a decade old.  There were those of us that wanted the newer developments just as bad as those of us that wanted things to remain the same.  Arguably the demand for retail space did not keep up with the growth of newer facilities.  But for sure the other options have had a profound impact on Park Plaza itself.  It's held up well nonetheless.  

I totally agree...good perspective.  I think Park Plaza has done remarkably well in its nearly 60 year run, but so many newer, outdoor retail centers in combination with changing retail patterns (online) eventually take its toll.

[theman]

13 hours ago, Architect said:

I totally agree...good perspective.  I think Park Plaza has done remarkably well in its nearly 60 year run, but so many newer, outdoor retail centers in combination with changing retail patterns (online) eventually take its toll.

Even the newer, outdoor center are struggling. Take the Promenade for example. There are plenty of empty storefronts there and it has a movie theater and restaurants that draw traffic to it and it still can’t get near capacity. Some of that is it’s location too along wit online shopping taking a major toll on brick and mortar stores.

On 12/22/2019 at 2:49 PM, Architect said:

Rumors of Banana Republic closing may have been premature...there was an article in the DemGaz in Friday's paper about the Gap store closing, so I emailed the journalist to ask about BR, and they said corporate didn't say anything about it.  Also, when I was there, it definitely seemed like everything was operating normally, unlike the Gap store where it was apparent with the merchandise and signage that it was closing.

p.s.  The article said that Gap closed their Rogers Promenade store last month, and that the only store left in the state would be the Factory Gap at Outlets of Little Rock

It official now that Banana Republic will be closing its store at Park Plaza leaving only the store at the outlet mall in the metro.

[LRretail]

On 1/8/2020 at 2:44 AM, theman said:

It official now that Banana Republic will be closing its store at Park Plaza leaving only the store at the outlet mall in the metro.

In speaking to some close to the situation, the outlet mall stores would be closing too but the penalties for doing so are too great.  They are waiting for some of those penalties to burn off and then those locations will close as well.  Nike Store in the Promenade will be closing and leaving the outlet mall location open as they are losing money operating both stores.  Unfortunately, I think this strategy will backfire as I don't see those that frequent the Promenade location going to the outlet mall store except during the holidays.  Most of the traffic seen at Promenade is driven by convenience and impulse purchase from those that live and work in a 2 mile radius.  Look to 2021 for there to be more traction in the tenant mix at Promenade when a significant portion of the special improvement tax repayment goes away.  Promenade won't fill up but tenants will be more inclined to take up residence here.  

[Architect]

In speaking to some close to the situation, the outlet mall stores would be closing too but the penalties for doing so are too great.  They are waiting for some of those penalties to burn off and then those locations will close as well.  Nike Store in the Promenade will be closing and leaving the outlet mall location open as they are losing money operating both stores.  Unfortunately, I think this strategy will backfire as I don't see those that frequent the Promenade location going to the outlet mall store except during the holidays.  Most of the traffic seen at Promenade is driven by convenience and impulse purchase from those that live and work in a 2 mile radius.  Look to 2021 for there to be more traction in the tenant mix at Promenade when a significant portion of the special improvement tax repayment goes away.  Promenade won't fill up but tenants will be more inclined to take up residence here.  

Regarding the Gap/Banana Republic scenario, less than four years ago, they obviously thought this market would support flagship stores at Park Plaza AND secondary outlet locations (noting there used to be a Gap McCain location), and now they’re saying it won’t support ANY of those stores? Why wouldn’t they think the closing of Park Plaza wouldn’t help the remaining outlet location (like Nike thinks)? I’d argue that Gap/BR probably carries the biggest national brand rep and people will go wherever they are as a destination. It’s all a bit odd - Central Arkansas is not a small retail market (top 75-80).

Is the retail apocalypse really that bad, or is Gap in that big of a trouble, or both?


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[LRretail]

13 hours ago, Architect said:

Is the retail apocalypse really that bad, or is Gap in that big of a trouble, or both?

The parent company that owns Banana Republic, Limited, and Gap is not doing well... and neither are many clothiers that are getting a bit long in the tooth.  That's not great to hear but it's the truth.  And yes, the retail apocalypse is that bad.  We've just now started getting the trickle down effects that other markets have already suffered.  Although it's not really an "apocalypse" per se.  It's more an alteration of retail channels.  Folks are starting to change the way they spend and it's either adapt or die.  Similar I suppose to when brands like Woolworths and MMCohn were downtown on Main St. but then went into indoor malls like Park Plaza.  Now it's time to be on the mobile apps or someone else will.  

[SangreRaVen]

Heard from a person in the mall that more stores are closing once their leases are up.. The guy mentioned Sephora, David's Burgers, Victoria Secret, H&M and a few others. Seems several of the stores are struggling to make any money there and Park Plaza is raising lease rates again.

 

-R

[Architect]

Heard from a person in the mall that more stores are closing once their leases are up.. The guy mentioned Sephora, David's Burgers, Victoria Secret, H&M and a few others. Seems several of the stores are struggling to make any money there and Park Plaza is raising lease rates again.
 
-R

Maybe...but H&M? That store isn’t even 3 years old, if that. And it’s HUGE! Their predictions were that far off the mark?


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[SangreRaVen]

47 minutes ago, Architect said:

Maybe...but H&M? That store isn’t even 3 years old, if that. And it’s HUGE! Their predictions were that far off the mark?


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That's what the guy said, not sure if it's true or not. He's the second person I know who works in the mall that has stated they've heard of more stores closing. Though this guy was the first to mention H&M. He did say the outlet mall location is the one doing good but the Park Plaza location wasn't. He also mentioned a few stores are looking at moving to other locations (Sephora to Pleasant Ridge Shopping Center ect). Guess we will see in time as their leases expire.

 

-R

[theman]

3 hours ago, SangreRaVen said:

Heard from a person in the mall that more stores are closing once their leases are up.. The guy mentioned Sephora, David's Burgers, Victoria Secret, H&M and a few others. Seems several of the stores are struggling to make any money there and Park Plaza is raising lease rates again.

 

-R

Why would Park Plaza raise rates when you have so many empty spaces and competition for stores in the market. That just sounds crazy to me. If that is the case they are writing their own obituary.

[SangreRaVen]

Would not be the first time a mall / retail center has raised lease rates even with empty locations. 

 

-R

[LRretail]

https://www.arkansasonline.com/news/2020/jan/26/value-of-three-malls-in-lr-sees-steep-f/?business-technology&utm_medium=social&utm_source=facebook_Arkansas_Democrat-Gazette_/_ArkansasOnline.com

[Architect]

https://www.arkansasonline.com/news/2020/jan/26/value-of-three-malls-in-lr-sees-steep-f/?business-technology&utm_medium=social&utm_source=facebook_Arkansas_Democrat-Gazette_/_ArkansasOnline.com

Interesting article. One variable in all of this is the diffuse retail development that happened in Little Rock 10 plus years ago...the multiple developments without significant scale and gravity has undoubtedly contributed to the issue.

I do wonder what tenants are “relocating” and where (I presume the Promenade).


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[LRretail]

16 hours ago, Architect said:

Interesting article. One variable in all of this is the diffuse retail development that happened in Little Rock 10 plus years ago...the multiple developments without significant scale and gravity has undoubtedly contributed to the issue.

I do wonder what tenants are “relocating” and where (I presume the Promenade).


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It’s actually a combination of things. Park Plaza has continued to live on well past its life cycle primarily due to redevelopment efforts in the past. But similar to how NW Mall has died in Fayetteville and tenants have dispersed, Park Plaza has now started to go the way of so many indoor malls. Tenants are not going to Promenade sadly as many are on their way out. The special taxes to be at Promenade is over $11 per SF on top of rent that is the most expensive in Little Rock. AW Lins, Nike, Victoria’s Secret, Bath Body Works are all on their way out.  We see some growth in tenant mix at the Outlet Mall but a more overlying trend is seeing tenants exit the market entirely either by market or nationwide. 

[Architect]

1 hour ago, LRretail said:

It’s actually a combination of things. Park Plaza has continued to live on well past its life cycle primarily due to redevelopment efforts in the past. But similar to how NW Mall has died in Fayetteville and tenants have dispersed, Park Plaza has now started to go the way of so many indoor malls. Tenants are not going to Promenade sadly as many are on their way out. The special taxes to be at Promenade is over $11 per SF on top of rent that is the most expensive in Little Rock. AW Lins, Nike, Victoria’s Secret, Bath Body Works are all on their way out.  We see some growth in tenant mix at the Outlet Mall but a more overlying trend is seeing tenants exit the market entirely either by market or nationwide. 

I don't follow/understand the "special taxes" variable at the Promenade.  Can you explain?

[LRretail]

1 hour ago, Architect said:

I don't follow/understand the "special taxes" variable at the Promenade.  Can you explain?

In the portion of Chenal where the Promenade exists a special district was set up in order to fund the development infrastructure necessary to build the Promenade and other areas surrounding it.  The cost is paid back over a long term period of time in the form of a special tax assessed on the property by the county. This cost is passed down to the tenants as a common area maintenance charge based on their occupancy as a proportion of the total SF of the Promenade which is an average of $11/sf per year. So a tenant that occupies 3000sf would pay $2750 in special taxes each month before paying a dime of rent to the owners of the Promenade.  Gross rents in Promenade including special taxes are running $46/sf which means a tenant occupying 3000sf is paying at least $11,500 per month in rent.  Using a 10% rent vs revenue factor, a retail business occupying 3000sf has to be generating $115k per month in order to break even leasing space at Promenade. 

[Architect]

In the portion of Chenal where the Promenade exists a special district was set up in order to fund the development infrastructure necessary to build the Promenade and other areas surrounding it.  The cost is paid back over a long term period of time in the form of a special tax assessed on the property by the county. This cost is passed down to the tenants as a common area maintenance charge based on their occupancy as a proportion of the total SF of the Promenade which is an average of $11/sf per year. So a tenant that occupies 3000sf would pay $2750 in special taxes each month before paying a dime of rent to the owners of the Promenade.  Gross rents in Promenade including special taxes are running $46/sf which means a tenant occupying 3000sf is paying at least $11,500 per month in rent.  Using a 10% rent vs revenue factor, a retail business occupying 3000sf has to be generating $115k per month in order to break even leasing space at Promenade. 

Wow. That’s not an insignificant obligation as it relates to lease amounts. When does that expire?


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[LR501]

Gearhead sent out an email announcing they are closing their store at Park Plaza as well. Also mentioned that they will be renovating and expanding the Promenade location, although I’m not sure how. Isn't the building that they’re in full? Hopefully more closures aren’t on the way out there too.

[SangreRaVen]

5 minutes ago, LR501 said:

Gearhead sent out an email announcing they are closing their store at Park Plaza as well. Also mentioned that they will be renovating and expanding the Promenade location, although I’m not sure how. Isn't the building that they’re in full? Hopefully more closures aren’t on the way out there too.

I think Nike is closing that location at some point

 

-R

[Arkanzin]

14 hours ago, LR501 said:

Gearhead sent out an email announcing they are closing their store at Park Plaza as well. Also mentioned that they will be renovating and expanding the Promenade location, although I’m not sure how. Isn't the building that they’re in full? Hopefully more closures aren’t on the way out there too.

Is Maggie Moo's still there?  I could see Gearhead expanding that direction.  That wouldn't be a huge addition.  

[SangreRaVen]

I think Maggie Moo's is still there, least I think I saw it when I drove by there yesterday.

 

-R