General Growth Properties, owner of Quail Springs Mall, is seeking a $2 million rebate to secure Iowa-based Von Maur as a replacement tenant for its departing Sears department store.
Doug Adams, a senior director with General Growth, said Sears, one of the mall's original anchor tenants, is set to close Feb. 1.
“It's both a problem and an opportunity,” Adams said. “One of the segments we think is weak at the mall and could be stronger is fashion.”
The rebate, to be voted on at a future date, is performance-based and requires a minium $15 million capital investment in the vacated store by Von Maur and a minimum sales volume of $27.5 million the first year and $30 million the following nine years. The rebate would be paid out over the 10-year period and cannot exceed $2 million.
Adams, speaking Tuesday at a meeting of the Oklahoma City Economic Development Trust, estimated the mall draws 13 million visitors a year, with two-thirds of the shoppers traveling from outside city limits. He noted Sears anchors an entire wing of the mall lined with shops that depend on traffic drawn by a large department store.
“The wing, if that anchor goes vacant for an extended period of time, can die,” Adams said. “So it's very important that we bring someone in quickly to replace Sears. And that replacement is Von Maur.”
Adams compared Von Maur to Nordstrom, Lord and Taylor and Bloomingdales, with the closest location in Wichita, Kan.
“They thrive and prosper on a strong dedication to personal service,” Adams said.
A sales forecast provided as part of Tuesday's presentation predicted sales at the Von Maur will more than double revenues at the Sears store, going from $20.9 million to $45.9 million a year. The anticipated sales tax increase to the city is $499,000 a year.
Adams explained that mall owners traditionally offer incentives for anchor stores, often providing them with free rent in exchange for creating a destination that draws shoppers to ancillary smaller stores that are then charged higher-than-normal rent.
Cathy O'Connor, president of The Alliance for Economic Development of Oklahoma City, alluded to troubled Crossroads Mall as an example of what happens when anchor stores end up vacant for extended periods.
Crossroads Mall reported $160 million in annual sales when it lost its first anchor, Montgomery Ward, in 2001. The remaining anchors all left over the next few years, leaving just a couple dozen smaller shops left before Crossroads sold to local investors in 2011.
O'Connor said the rebates, if approved, would go to General Growth Properties to help it offset costs of recruiting and accommodating Von Maur at Quail Springs.
“It's a difficult thing to do these days,” O'Connor said. “There aren't a lot of anchors out there. We've seen what can happen when you begin to lose anchors.”
The wing, if that anchor goes vacant for an extended period of time, can die. So it's very important that we bring someone in quickly to replace Sears. And that replacement is Von Maur.”
A senior director with General Growth