Watching Sears and J.C. Penney closures at Cortana Mall gives clothing store operator Yasser Salameh the same feeling he had in the 1990s when Bon Marche faded from Baton Rouge's retail scene going against Cortana.
In recent years, it's been Cortana giving way to the newer Mall of Louisiana. With Sears and J.C. Penney's departures, Cortana will be left with four of its six big anchor stores vacant, as well as many of its interior shops, raising Salameh and other store owners and managers' concerns about the future of the shopping center as its owner focuses on redevelopment outside the retail realm.
“It doesn’t look good for the future, the near future,” said Fayez Ezzir, who owns Lulu’s, a women’s clothing boutique, and Top Fashion, which sells men’s clothes. “Maybe we can hold on for a year, or a year and a half,” he said.
Salameh's store, Milano Uomo, has been in Cortana Mall since 1997. Before that, the store had a location in the older Bon Marche Mall. That mall limped through the 1990s until it was redeveloped into the Bon Carré Business Center in 2000.
“We stayed in Bon Marche until the last minute,” Salameh said. “All the national stores left Bon Marche, and it was just the small companies,” he said. “I feel like once the national stores leave, that’s it,” he said, calling the latest departures at Cortana "very bad news," while noting the parallel scenarios in his retail journey.
The departures also put more redevelopment pressure on Moonbeam Leasing & Management, the Las Vegas company that bought Cortana and the former Mervyn’s anchor store in 2013 for a combined total of $6.15 million. The company said in a statement it is continuing plans to remake the mall to lure in health care, office and education tenants, as it has done with other mall and shopping center properties around the country.
Top Fashion has been open for five years; Lulu’s for one year, Ezzir said. He’s seen sales drop 15 percent each year at Top Fashion.
“The reason we stay here is that rent is a little bit low,” he said. For the 3,200-square-foot Lulu’s store, Ezzir said he pays $1,700 a month in rent. If his store were in the newer Mall of Louisiana, he said he would pay “$10,000 to $12,000, at least” in monthly rent.
“We don’t have a lot of expenses, so we can manage and lower our expenses,” Ezzir said.
Salameh said his sales have dropped 50 percent in the past year. But he said the tension around the city after the police shooting of Alton Sterling, the fatal ambush of three law enforcement officers, and the devastating August flood were factors.
“We have to look for another location very soon,” he said. “We’re a family operation, but we’re barely making expenses here.”
Several factors led to the exodus of businesses from Cortana Mall. The first is demographic changes. The mall is no longer at the center of Baton Rouge as the population has moved southeast.
“Once upon a time, those were the highest traffic counts in the city around Cortana,” said Dottie Tarleton, a veteran commercial real estate agent with Stirling Properties. Now, the mall is surrounded by older neighborhoods, where the residents don’t shop as much.
The second is competition. The center of Baton Rouge retail used to be downtown. When Bon Marche started as an open-air strip-shopping center in 1960, retail moved down Florida Boulevard. Bon Marche was enclosed as a mall in 1974 to compete with Cortana, which had been announced a few years earlier. After Cortana opened in August 1976 at the intersection of Airline and Florida, it displaced nearby Bon Marche as the place to shop. When the Mall of Louisiana opened in October 1997 at the intersection of Interstate 10 and Bluebonnet Boulevard, in many cases duplicating Cortana's anchors and retailers, it eventually took away Cortana’s crown as the dominant local retailer.
Over the past few years, national retailers such as Foot Locker, Aeropostale, Chick-fil-A and LensCrafters have steadily moved out of Cortana. The businesses left for a variety of reasons — Foot Locker has seen a sales boom while shedding underperforming stores; Aeropostale filed for bankruptcy and shuttered more than 150 locations in the U.S. and Canada; Chick-fil-A has opened several stand-alone locations across metro Baton Rouge; and LensCrafters has started to open locations inside Macy’s stores.
Since January 2016, Cortana's shedding of anchor stores accelerated. Macy’s closed its Cortana location early last year. That was followed by the news in January that Sears would leave the mall and then an announcement earlier this month that J.C. Penney would shut its store. All three of the chains have been under financial pressure, and the Cortana stores were among scores that were identified nationally for closure to reduce costs. Each continues to operate a store in the Mall of Louisiana.
J.C. Penney is closing its Cortana Mall location, shutting down another anchor store in the …
The loss of the anchors and major national retailers has taken its toll on Cortana. After all, those stores are draws for significant numbers of shoppers, who then end up stopping at some of the smaller local retailers in the mall. Plus, all of the employees were potential customers for other Cortana retailers or restaurants. Of the 139 retail storefronts in Cortana, a recent survey showed 48 were occupied.
After J.C. Penney closes its Cortana store, the only anchors left in the mall will be Dillard's, which has reduced its presence to a clearance store that only takes up the first level, and Virginia College.
“I think that’s the nail in the coffin for retail at Cortana Mall,” Tarleton said.
Moonbeam has a more optimistic view of the situation. The closures of Macy’s, Sears and J.C. Penney will benefit the mall in the long term, the company said.
The company pointed to what it did in Ocoee, Florida, where it converted vacant anchor spaces at the Orlando-area shopping center into office space. A call center operated by Xerox Corp. opened in a vacant Sears store in 2016 and is expected to create 500 jobs. Bed Bath & Beyond announced last month it would open a call center where a Belk store used to be in the mall, creating another 500 jobs. The call centers are bringing restaurants and entertainment centers to the property, something the company wants to duplicate at Cortana. The company also is looking at using part of the mall for apartment developments.
“Moonbeam is ahead of the game with revitalizing malls by bringing in nontraditional alternatives to retail anchor tenants, such as office, education and health care tenants in addition to retailers, restaurants and entertainment providers,” the company said in a statement.
Proof that redevelopment is possible is just down Florida Boulevard at the former Bon Marche Mall, though it took some public funding to revitalize the property as the Bon Carré Business Center. It has a mix of tenants: various offices, a computer data center and the Louisiana Technology Park business incubator, operated by the publicly funded Research Park Corp. that initially stepped in as a co-owner of the former mall with a group of private, local investors.
Marty Mayer, president and chief executive officer for Stirling Properties, a Covington-based commercial real estate developer and manager, said redeveloping Cortana may be the best course of action.
“I’m not sure they’re going to make it as a retail location,” Mayer said. “Retailers in general are not really bullish on expansion or adding new stores. Who is going to expand there?”
After all, department stores such as Dillards and Macy’s aren’t adding new locations. And the retailers that were staples of shopping malls, such as Sears and J.C. Penney, are closing stores to deal with the business they’ve lost to Wal-Mart, Target and Amazon.com. The real estate research firm Green Street Advisors told The Associated Press that about 800 stores, or 20 percent of all U.S. mall anchor space, would need to close to match the inflation-adjusted sales productivity of 2006.
Sears, once the monolith of American retail, says that there is "substantial doubt" that it …
While the Mall of Louisiana is considered to be a Class A space because of its prime location and sales, Cortana is a “Class B-minus-minus," Mayer said. The mall is well-located at a major intersection, but it has lost anchor stores. “It’s salvageable, but it requires significant redevelopment,” he said. A Class C mall is a property that has problems with an undesirable location and a lack of tenants.
Turning Cortana into a hub for health care is a possibility, he said, because of changes in health care delivery brought on by the aging population and the expansion of Medicaid services. “Bringing specialized medical services to a retail-type location would be a good use for some of those spaces,” Mayer said.
Mayer said he expects about half of all Class B and C malls will close or become something different in the next few years. “This is a personal feeling, but retailer change is happening faster,” he said. “It’s all evolving and changing, and the impact is putting retailers on the ropes.”
Now that Cortana Mall is losing an anchor tenant for the second time in two years, a local c…