Leading Question

By Lori Johnston January 31, 2010

Bradenton’s DeSoto Square lost Dillard’s in late 2009, making residents and city officials worry that the 600,000-plus-square-foot mall might eventually become an empty and dark shopping center, creating a blighted pocket in the city.

DeSoto, of course, isn’t the only mall experiencing vacancies. Centers around the country are losing their anchors and experiencing declining store sales, a crisis noted by publications such as U.S. News and World Report, which reported that 400 of the largest 2,000 malls in the U.S. closed in the past year.

The vacancy rate at the largest U.S. malls grew to 8.8 percent in fourth quarter 2009 from 7.1 percent in fourth quarter 2008—the highest in more than 10 years, according to REIS Inc., a New York-based real estate research firm. The company reported that the average asking rent at regional malls was $39.03 per square foot, down 3.6 percent from fourth quarter 2008 and the lowest since second quarter 2006.

If you look at sales, the reported industry measure that signals whether a mall will fail is that it’s generating sales per square foot of $250 or less; DeSoto Square officials would not disclose sales per square foot, but Newport Beach, Calif.-based Green Street Advisors estimated its 2009 sales per square foot to be just over $300. The company gave DeSoto Square in late 2009 a quality grade of C+.

But lately mall owners and governments are coming up with creative solutions to redevelop the centers for alternative uses, which could include offices or residential, says retail planning consultant Bob Gibbs, president of Michigan-based Gibbs Planning Group. He’s been involved in those efforts, such as bringing offices, a call center and a YMCA to a Chattanooga, Tenn., failed mall.

 “Many investors see the failed malls as a big investment opportunity for a couple of reasons,” Gibbs says. “First, they are usually well located with good highways and transportation. Generally they are surrounded by high-density, established residential areas, and they have a lot of surplus parking.”

Gibbs says some centers are transitioning from an upscale department store to a value-oriented store like Kohl’s, and Gibbs also has seen interest from European and South American retailers expanding to the U.S. “They love the mall concept,” he says.

Even more creatively, DeSoto Square could join other U.S. shopping centers that have transformed empty space into art galleries and museums, YMCAs, schools, day cares, dance studios, performing arts centers, skating rinks, county offices, libraries, courthouses, city halls and even such alternative businesses as tattoo shops. In Westfield Sarasota Square, an empty jewelry store is now the SurREEL Cinema Lounge, a partnership between the mall and the Ringling College of Art and Design that will showcase Ringling students’ animation in a home theater environment. Ringling also plans to offer art and design programs and lectures in the space.

Municipalities have assisted shopping center owners in the rezoning and reuse of centers, and in the case of DeSoto Square, the owner, Simon Property Group, has met with Manatee County to discuss potential uses. DeSoto Square manager Jeni Wilson says they are exploring nontraditional uses in addition to seeking to enhance the retail offerings. “We’re looking at all options,” she says.

DeSoto Square has also seen national tenant McDonald’s depart, but Wilson expects to announce a replacement in the first quarter 2010. She says the vacancies were expected and are due to leases expiring and tenants opting not to renew due to economic conditions.

In Manatee County, a task force was set up to assist the mall and help bring in tenants. “Certainly you wouldn’t want it to sit empty,” says Robert P. Bartz, president of the Manatee Chamber of Commerce.

Conversations with the county have sought to determine “how we can work together and partner to utilize this piece of real estate that’s valuable to the community,” Wilson says. She would not disclose any potential plans for the mall, saying it was too early in the process. But Wilson explains that if a nontraditional tenant came in, the changes could include creating a redevelopment plan for the vacated Dillard’s space and corridor, reconfiguring the parking lot and adding infrastructure. She hesitates to give a timeframe for any new tenants, traditional or nontraditional, but says in the case of a nontraditional tenant, depending on redevelopment and permitting, it could take one to two years.

At DeSoto Square, short-term uses being considered include moving the county’s Central Library to the mall during its renovations.

Another possibility is to expand the CRA (Community Redevelopment Area) concept to include DeSoto Square and centers surrounding the mall, which would offer additional incentives for businesses, says Karen Stewart, economic development program manager for Manatee County government. Those could include expedited permitting, impact fee reductions and financial incentives for job creation at certain wages.

In this economic environment, the county doesn’t want any regulatory measures to inhibit the mall’s ability to bring in tenants, Stewart says. “We want that to be a vital part of our community. We’re working with them to help them in any way that we can.”


[ DeSoto Square by the numbers ]


Year Built


Number of storefronts


Number of stores still operating  

(62 retail, 9 eateries, 15 kiosks)

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