The mall, the long haul and a pall

Once the heart of Findlay's boast of being a regional shopping center, Findlay Village Mall is likely to get a new — if yet uncertain — identity. The same property that was expanded and remodeled in 1990 for $25 million was sold this week for $4 million, said the buyer, Kohan Retail Investment Group, of Great Neck, New York. The decline of the mall, like many others in smaller towns, is a common one. The mall is a fixed asset that cannot easily be changed to fit changing times, said Mark Stapp, executive director of the master of real estate development program and professor of Real Estate at Arizona State University. "At one point it was feasible: You came up with the idea. You designed it. You constructed it. You leased it," Stapp said. "It was occupied and there was a community of a certain character that supported it." Mall shopping has since been abandoned by many. Viewing pictures of Findlay Village Mall online, Stapp called it a "classic enclosed mall built in the '60s, '70s, maybe early- to mid-, late-80s." "These are tough to resolve what to do for a variety of reasons," he said. By its very nature, the mall was ill-equipped to adapt to 21st-century changes in consumer tastes, retailer strategies and the rise of online shopping. "Demand (for goods) is mobile. The (mall) is not mobile," he said. "As the demand changes, and either shrinks or its characters change, the supply — which is the stores — can't move with that and it's hard to change them to adapt because they are expensive to change and they're difficult to change and so they become obsolete." The new owner, Kohan Retail Investment Group, this week said it plans to bring multiple activities to the mall. Larger spaces, formerly occupied by anchors like Sears, Elder-Beerman and J.C. Penney, could become marketing companies' call centers, employing hundreds, said Mike Kohan, chief executive officer of Kohan Retail. Those employees would need to eat, so a food court could have a steady stream of customers, he said. Those same workers also would likely shop at stores nearby, he said. Kohan would like to add some entertainment venues, like laser tag, for kids. It's Kohan's mode of operation to convert stressed malls into multipurpose centers. The company owns about 40 malls from Texas to New York. But Stapp said the food court idea, in particular, could be difficult to pull off. "Can you backfill some of those (vacant mall) spaces? It just doesn't generate the warm bodies in sufficient numbers on a longtime period, every day, buying enough stuff from the food court," he said. "So it can be reduced substantially in size. It's really tough to figure out what to do with some of this space. It really is. I think this was happening already. I think the pandemic has accelerated the rate at which we will find retail spaces, in particular, becoming obsolete." "We simply do not need them. We don't need that much space. And because of shape, because of location, because of size, you can't replace the tenancy many times," Stapp said. "So you've got reduced demand for space. The very best space wins. Everything that's not the very best has got diminished — greatly diminished — value." Even the very best mall spaces would be used for "something maybe totally different," he said. Stapp sees a trend toward using malls and big-box retail for warehouses. Malls also can be converted to multi-family housing or demolished and replaced with affordable housing, he said. Since the 2008-09 recession, retailers have preferred to locate in bigger malls with larger surrounding populations having higher incomes. Ownership of space at many malls has been fragmented and operations can get complex with the mall itself being "controlled by a variety of documents," Stapp said. Issues of common areas, maintenance, obligations, cross parking, cross access, signage, how much internal authority the developer has are among issues that typically arise. "These things get really complicated, really quickly," he said. "If you have some kind of debt on it, a lot of times the debt on these things makes it more difficult." Being unable to pay off debt has been a problem for many malls. Stapp believes one of two things happened with Kohan and Findlay Village Mall: "They bought the (mall's) debt for pennies on the dollar. You may not even be able to determine by looking at public records what they paid for it," he said. "The alternative to that is (Kohan was not) a lender and (the mall) just foreclosed. My guess is (Kohan) bought the debt from somebody."