Ellen Junge has been chasing mall traffic for 32 years, luring shoppers to her business, the Cookie Company, with the smell of fresh-baked cookies.
When a mall is doing well, cookie sales rise. But when stores close and foot traffic slows, Junge sees it at her cash register.
That’s why she closed her shop at Oak View Mall this spring, after operating there for 23 years. Her sales fell by more than 10 percent in 2014. When her husband took another job and she wanted to close one of her stores, she decided to keep her six-year-old store at Westroads Mall, where her business is growing and last year outpaced her Oak View sales.
Junge’s cookie shop sales are a small part of a big shift in the metro’s two major enclosed malls: Sales have surged over the past decade at Westroads but slumped at Oak View.
Now, Chicago-based General Growth Properties, which owns both malls, is studying how to position Oak View for a future where consumers’ shopping patterns, and the local competition, are dramatically different from when the mall opened in 1991.
Oak View, at 144th Street and West Center Road, was the city’s dominant mall into the 2000s. In 2005, its sales per square foot, a key measure of retail strength, were 15 percent higher than Westroads’ — $425, compared with $370.
But a decade later, the tables have turned. Increased local competition, faltering national retail chains and changing shopper habits have cut into Oak View sales, while newly renovated Westroads has used its central location to attract popular new retailers.
Sales at Westroads, situated at Regency Parkway and West Dodge Road, were ahead of Oak View’s by 26 percent in 2014, at $480 per square foot compared with $380, according to Omaha commercial real estate company the Lerner Co. Mall managers confirmed the figures, though Westroads management said its sales were closer to $470 per square foot last year. The figures do not include sales at department stores or other retailers larger than 10,000 square feet.
And the gap is widening this year. Westroads, which saw $300 million in sales in 2014 and is 98 percent full, continues to expand, with plans in the works for a new food court and a new retail area facing West Dodge. Oak View has lost five retailers so far this year and its occupancy rate has slipped to 88 percent.
That’s not nearly as dire as the problem faced by Crossroads Mall, which is 56 percent occupied, or Mall of the Bluffs, 48 percent occupied. Neither is considered “viable,” Lerner said, and both have been targeted for redevelopment. But it puts Oak View toward the bottom of General Growth’s more than 100 malls in occupancy, with most more than 95 percent full.
“Although Oak View is still considered to be a good mall surrounded by excellent demographics, General Growth is faced with coming up with a strategy to reinvigorate Oak View with a number of its own unique tenants,” Rick Quinlevan, president of Lerner Brokerage Services, wrote in his annual Omaha retail market report this spring.
That’s now happening, said Ted Harris, Oak View Mall general manager.
“We are developing and creating a strategic plan to address the vacancies,” he said.
In some markets, mall owners have turned enclosed malls into open-air lifestyle centers or mixed-use complexes with housing. Harris said General Growth doesn’t envision major changes like those at Oak View.
“We’re looking more toward retail,” Harris said, including box stores that are “nontraditional” for an enclosed mall but seen in strip shopping centers such as L Street Marketplace or Shadow Lake Towne Center.
“You can’t really hold onto the things that were successful in the past. You have to be open to new opportunities,” he said.
Leasing agents are in negotiations with potential tenants, he said. Such a store could require some construction to create an outdoor entrance, or a reshuffling of tenants to make room for one larger store.
Shoppers said Oak View lacks Westroads’ brands and variety.
Gus and Melissa Frazier, having lunch recently at Westroads, said a unique store brings them there. “I just like the new shoe store, the House of Hoops,” Gus Frazier, 33, said, referring to the Foot Locker specialty store that opened its only Omaha location at Westroads in 2014.
Amy Vanderpool, 41, is frequently at both malls, where she runs a walking program for CHI Health. But she shops more at Westroads, where there’s an Old Navy. The Old Navy near Oak View Mall closed in 2010, when the chain opened a store at Village Pointe.
Jin Kim, 27, a South Korean who frequently visits her sister, a Creighton University student, said, “The brands that I look for, I find a lot of them at Village Pointe.” She also shops at Nebraska Crossing, and recently stopped at Westroads, where she shopped at H&M.
But she hadn’t been to Oak View.
“I haven’t heard of that,” she said.
Retail location consultant Jeff Green, who has studied the Omaha market, suggested that General Growth could consider adding residential, medical or other uses at Oak View. He also said the company might be considering selling the property, to avoid having competing centers in the same market.
“It’s surprising that they still have Oak View,” he said, given General Growth’s focus on buying and operating malls with higher sales.
General Growth Chief Executive Sandeep Mathrani told analysts in January, “We always look at opportunistically selling lower-quality malls,” but didn’t define those. General Growth says it looks to run Class A and B+ malls; Oak View is considered a Class B mall based on current sales and market position.
Class B malls are stable and “adequately serve their target shopper,” Green Street Advisors said in a 2015 mall outlook report. But a mall is a “fragile ecosystem,” the report said. Vacancies beget vacancies and a mall’s sales can spiral downward until it becomes obsolete, the report said.
Westroads Senior General Manager Jim Sadler said there are no plans to sell Oak View, and that having two centers in one market is a benefit. They share a marketing coordinator and leasing agents and have two different types of properties to offer to potential tenants.
Oak View, Sadler said, “really needs to find its niche in the overall marketplace.”
When Oak View opened, shoppers didn’t have as many choices as they do today. Westroads, Crossroads and Mall of the Bluffs were the main competition for Oak View, then on the western edge of Omaha and surrounded by new homes and undeveloped land.
Westroads fought back with a $16 million remodel before Oak View opened, but Oak View became the destination of choice for a generation of west Omaha teenagers and their parents.
Mall managers say things took a turn after 2004, when Village Pointe opened at 168th Street and West Dodge Road. The trendy open-air lifestyle mall brought new-to-the-market retailers to high-income households in parts of west Omaha that had continued to see new housing and office growth.
Omahans also had new choices at Regency Court, which added major national retailers in 2003; and at Shadow Lake, opening in 2007 in Papillion; L Street Marketplace, new in 2008 near Oak View; and Nebraska Crossing Outlets in Gretna in 2013.
The competition took a toll on sales and foot traffic, Harris said.
“We’re sitting in between all of them,” Harris said.
Competition is likely to continue to grow: A 2014 market study, commissioned by the city to study a Crossroads redevelopment proposal, found that Omaha has an oversupply of apparel retailers and that new tenants at Crossroads could cause some cannibalization.
Westroads has used a “slow and steady” series of improvements to draw more traffic and stay lively in the face of competition, Sadler said. The Cheesecake Factory and Granite City Food & Brewery opened their only Omaha locations there in 2006, with their operators citing demand from Omaha diners and the mall’s central location.
Several retailers targeting juniors and women opened in 2007 and 2008. And 2008 saw the opening of the 14-screen all-digital Rave Motion Pictures (now AMC Westroads 14), operators citing a critical mass of restaurants. In 2009, mall staple the Gap opened at Westroads, closing its Crossroads store.
In fall 2014, Westroads opened an 18,000-square-foot H&M store to a line of hundreds of shoppers, and General Growth completed much of a $12 million mallwide renovation, its fifth major face-lift since it opened in 1968.
Westroads’ location is a key factor in its resurgence, Green said. The West Dodge Road corridor is prime real estate, and proximity to the Interstate 680 loop makes it easy to reach. Oak View, by contrast, is more of a “community” center, accessed by local roads.
Harris said Oak View was “on the upswing” in 2014, with an expanded Victoria’s Secret store, a new Zumiez, and an expanded Visionworks store. “We had a lot of momentum. What happened in January and February was unplanned, for the entire industry.”
Oak View was hard hit by national retailers’ bankruptcies and closure plans. Retailers face a drop in mall traffic nationwide, amid growth in online shopping, evolving teen clothing tastes and a shift to urban living.
Wet Seal closed hundreds of stores, including at Oak View, but not at Westroads, where sales were stronger. Eddie Bauer and Hollister closed their Oak View stores, among many locations nationwide.
Westroads hasn’t escaped closings. Deb Stores’ bankruptcy closed its stores at both Omaha malls, and Westroads’ Delia’s store closed, and has since been filled with a local boutique.
Oak View also has lost tenants to Nebraska Crossing Outlets: The Kitchen Collection closed its Oak View store in April, much as the Gap closed its Oak View store in 2013 after opening an outlet store in Gretna.
In trying to rebuild occupancy, Oak View has a lot going for it, Harris said. Its four anchor stores — Sears, J.C. Penney, Dillard’s and Younkers — are in place with no announced plans to leave, though Sears and Penney’s have been closing stores nationally. The property is in good condition and is in a neighborhood with solid household income demographics.
The mall is still a good asset, agreed Adam Marek, vice president at Colliers in Omaha. He said large trade areas go through cycles of “birth and rebirth.”
“That’s just the natural evolution and the ebbs and flows of having something that large,” he said.
Properties surrounding Oak View that are not owned by General Growth but had seen vacancies have mostly filled up. A former Linens ’N Things has reopened as a bowling center, and developers still plan cheerleading and trampoline businesses in a former Hy-Vee Supermarket.
“It’s a great location: high traffic, good exposure,” said Tanner Wiles, an investor in the Spring City Amusement Center. “I think it’s still viable.”
Junge said she was sorry to leave Oak View, calling it a “beautiful” mall that’s been the victim of online sales and competition elsewhere in Omaha.
“It just needs a different concept.”
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