Mall tenants concerned with their place in the community
Published 10:35 am Tuesday, November 18, 2014
A recent multi-million dollar deal to reconfigure the Oak Park Mall may mean a huge new Hy-Vee store for Austin, but the move also means some local businesses will leave town or close for good. That fact is spurring many mall tenants to ask a big question: Why aren’t more people concerned?
“How can this be good for Austin?” said Shan Kehret, marketing director for the Oak Park Mall.
Kehret and more than a dozen business owners and employees met Monday with Vision 2020 representatives to determine how Vision 2020 could address tenant needs and business transitions while the city works to secure the mall site.
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Those owners say uncertain timelines and a lack of support from area organizations are creating more problems than solutions for many owners. While some businesses have secured new locations, others are struggling to find a place in Austin and several businesses have decided to move out of town altogether.
What’s the deal
The city of Austin and the Austin Port Authority announced a $3.2 million deal to purchase the Oak Park Mall site last month from Chicago-based Martin Graff of M H Graff & Associates Inc. and Martin Goldman of M J Goldman & Co. Ltd., the businessmen behind Oak Park Mall Ltd. Partnership and Oak Park Mall Land Ltd. Partnership.
The Hormel Foundation granted the $3.2 million to the city to purchase the site, while the city is expected to demolish most of the mall to make way for a 60,000- to 90,000-square-foot Hy-Vee grocery store.
The city’s purchase agreement includes acquisition of the entire mall facility — except Shopko, which is owned by the retailer — located at 1301 18th Ave. NW and an additional out lot located along 18th Avenue Northwest. That includes the mall property, Younkers and CineMagic 7.
The city doesn’t own the mall yet, however. City officials must work out a purchase agreement to buy the property with the mall’s current landlords, as well as with Shopko, Younkers and Cinemagic 7 representatives who all have agreements with the landlords as well.
Yet the deal doesn’t include relocation costs for mall businesses, most of which will have to move out of the space.
Younkers, Shopko, Cinemagic 7 and Anytime Fitness won’t have to move, but all other businesses will eventually have to leave the mall site.
That’s the problem many business owners say they’re struggling with. The mall acquisition deal was announced in early October, and many businesses don’t know when they’ll have to move out.
“What’s the penalty if we can’t move out by Dec. 31?” Corey Squier, owner of Sears, asked during the meeting.
Businesses like Sears and Impact Fitness and Martial Arts have found places to stay in Austin, but several mall tenants aren’t so lucky. Several businesses, like Gypsy K Consignment and Enchantertainment, are moving to Albert Lea. Other businesses like A to Z treasures and Just For Kix dance studio are still looking for a new home.
Longtime businesses like GNC and VisionWorks may not reopen in Austin, either. GNC representatives say the mall location will close Nov. 30 but it’s uncertain whether the company will find another spot to open in town.
“In many cases, their rent is doubling or tripling,” Kehret said.
Mall tenants say the relocation hasn’t been made easier by the ongoing purchase agreement negotiations.
Oak Park Mall landlords sent lease termination letters about three weeks ago to a majority of businesses that asked them to vacate the mall by Nov. 30. The letters came despite assurances from the city that mall businesses would likely stay open through the holiday season this year.
City attorneys say the termination letters were required as part of the purchase agreement and by law. The city worked out an agreement last week that would allow mall tenants to stay until Dec. 31.
The city’s negotiations to buy the mall will take time, however, as city of Austin Finance Director Tom Dankert told the Austin City Council Monday the city is essentially “acting as the middle man” in the agreement.
The city has to work with multiple businesses to make sure any agreements they had with the mall’s landlords will align with the city’s purchase agreement. City officials then have to present their work to Hy-Vee representatives, who have to sign off on those agreements when they buy the property from the city.
“We’re not dealing with your local mom and pop shop, who takes the agreement to their local attorney who reads over it and has it back to you that afternoon,” Dankert said.
Case in point: It took two weeks to work out the lease extension for mall businesses.
What’s more, the city technically can’t do much to help mall tenants until they legally own the site. While Dankert said small loans may be available to mall business owners, the city can’t legally broker deals with tenants to stay past Dec. 31 until the city owns the mall site. And no one knows when the purchase agreement will be concluded, which means no one knows when mall tenants could receive help from the city.
A lack of support
That doesn’t help businesses like Sears, which may have to stay at the mall after Dec. 31. Many owners say there aren’t many ready locations to buy in Austin, as most commercial properties would need substantial upgrades before mall tenants could move in.
“It’s frustrating for them,” said Troy Williams, Impact Fitness and Martial Arts owner.
Tenants are concerned with what they see as apathy from area residents over potentially losing local businesses.
“They made a Facebook page for Target, but why aren’t people doing the same for us?” Squier said.
In addition, mall tenants say they’ve received little to no help from local organizations like the Austin Area Chamber of Commerce. Chamber representatives met with the mall’s business owners last month but have yet to follow up on any requests, according to several tenants.
In addition, the Chamber didn’t reach out to the mall to take part in Christmas in the Northwest activities until earlier this month, when plans for the annual event were solidified and ready to be publicized.
Mall officials say that’s part of a lack of support for the mall in general.
“There’s been a black cloud over the Oak Park Mall since I started working here,” Kehret said.
The mall has encountered several problems over the years. Oak Park Mall is notorious for its parking lot, much of which is in serious disrepair. Mall landlords have often made headlines over the past few years for being behind on the mall’s taxes, and the property has come close to being forfeited to Mower County at least twice.
Yet Kehret and others say the mall was still an integral part of the community despite its perceived issues. The mall often rented out spaces to nonprofits like Kids Against Hunger or the Mower County DFL at little to no charge. In addition, the mall has been a gathering place for senior citizens and vulnerable adults from places like Cedar Valley Services and Primrose Apartments. Many residents have used the mall as an indoor walking space to keep fit, and several organizations use the mall during the holidays for area charities, like the United Way of Mower County’s coat drive and the Salvation Army’s Angel Tree.
“People in the community don’t know how connected they are to the mall,” said Dylan Kaercher, owner of Enchantertainment.
The mall’s impending closure means those organizations will have to go elsewhere. Other community events will also be canceled.
“There’s not going to be a Santa Claus at the mall this year,” Kehret said.
Laura Helle, director of Vision Creation at Vision 2020, said Vision 2020 volunteers could potentially help find locations for businesses that have yet to move. In addition, Vision 2020 may be able to help find small grants for business owners to offset relocation costs. Vision 2020 will once more meet with mall tenants next week to discuss potential options.
Yet the mall tenants say they’re still stuck in limbo as many don’t know when they’ll have to move out for good.
“Every extra month that we can stay open is a benefit,” Squier said.
Where are the businesses going?
• Impact Fitness and Martial Arts is moving across 18th Avenue Northwest to occupy part of the old Cashwise building near Pizza Ranch.
• Sears is moving to the old Cashwise building.
• Gypsy K Consignment is moving to the Northbridge Mall in Albert Lea
• Enchantertainment is moving to the Marion Ross Arts Center costume department in Albert Lea
• GNC will close Nov. 30. It’s uncertain if they will reopen an Austin store.
• A to Z Treasures is still looking for a new location.
• Party Zone Entertainment will close down once the mall is demolished.
• Just For Kix is looking for a new location.
• The Mower County DFL is looking for a new location.