Despite a national decline in department store sales and flagging mall traffic, the new owner of the once-bustling Esplanade Mall in Kenner has demonstrated a knack for finding ways to draw customers and fill vacant storefronts at shopping malls.

But he also has also drawn controversy in some of the communities served by his other malls, sometimes racking up hefty unpaid taxes and electric bills, and in some cases facing criticism for letting his properties fall into disrepair.

Mike Kohan, who bought the Esplanade Mall in June for $9.25 million, focuses on trying to revive distressed and aging malls. His strategy includes filling vacancies by adding mixed-use retail, restaurants and smaller local businesses, as well as hosting activities and community events like farmers’ markets or miniature golf.

“Retail is diminishing in one way or the other. What are the other choices you have? You can’t just sit and wait for the retail to show up,” said Kohan, whose firm, Kohan Retail Investment Group, is based in New York.

“You’ve got to think out of the box,” he added.

Already, Kohan is working to find a new use for the former Macy’s building, an anchor store that has been vacant since last year, when the retail chain closed dozens of U.S. locations.

Kenner Mayor Ben Zahn confirmed last week that the 278,208-square-foot building is being considered as a potential destination for City Hall. The move would give city officials additional space and house more departments under one roof.

Esplanade Mall is one of three spots under consideration for Kenner City Hall, according to Zahn, along with one at the Pavilion Shopping Center and another at Chateau Boulevard and West Esplanade Avenue.

All three sites are in former retail hubs that are now struggling.

Perhaps most important for Kenner’s bottom line, the move could help revive one of the city's key sources of sales tax revenue, since the steady stream of city workers and residents heading to City Hall could end up spending money in the mall's stores and food court.

“We’d like to make it easier for residents to do ‘one-stop shopping’ ” for city services, Zahn said.

No silver bullet

Kohan’s company operates 23 malls, sometimes purchased out of bankruptcy or foreclosure and, he says, already in tough shape.

He’s had varied results with his approach, as documented in years of news reports in suburban cities where his malls operate. In several cases, he’s been taken to court, accused of falling behind on necessary maintenance and repairs.

The electricity was temporarily shut off at one mall in Rotterdam, New York, in 2015, over an unpaid $300,000 electricity bill, according to The Daily Gazette in Schenectady.

And last December, officials in Vero Beach, Florida, nearly cut off power at his Indian River Mall after Kohan racked up more than $200,000 in unpaid bills, according to Treasure Coast Newspapers. Kohan had bought the mall for roughly $12 million about six months earlier.

But there's no silver bullet approach to reviving an aging suburban mall that's already experienced years of decline, he says. Sometimes he makes it work; other times, he can't.  

“You’ve got to straighten the ship,” he said. “The ship is sinking, and you’ve got to try to straighten it. There are some possibilities, in some cases, that you cannot, if it’s too far out.”

The financial services company Credit Suisse predicted last year that up to 25 percent of the nation’s 1,200 malls will close during the next five years as department store chains like Macy’s continue to contract.

As national chains are closing stores by the hundreds, and longtime stalwarts like Toys "R" Us disappear altogether, mall operators are rethinking their strategy.

“We're working through a number of the bankruptcies and replacing them with better retailers. We're upgrading our mix, so you put it all together and I think that's what's generated at least the increase in sales,” David Simon, CEO of Simon Property Group, one of the country's biggest retail real estate owners, said on an earnings call in July.

Bringing in local mom-and-pop businesses is not a cure-all, but experts say those stores could fill in gaps and provide an opportunity for entrepreneurs who lack the resources to sign a long-term lease at a busy shopping center, but who can risk a few hundred dollars a month in rent.

Case in point: After acquiring the struggling Washington Square Mall in Indianapolis in 2016, Kohan’s company reconfigured it into a hub for mom-and-pop stores. S&I Videos, which had been selling VHS videocassettes and DVD’s at a flea market, was one business that gave it a shot.

Though the store’s sales were off, the move offered advantages.

"We went from $1,200 a month (in rent) there to $400 a month here," the store’s co-owner, Irvin Brummett Sr., told The Indianapolis Star last year.

'So far, so good'

To industry analysts like Paula Rosenblum, re-imagining older suburban malls as activity centers makes sense, especially if they’re comfortable and kid-friendly.

Rosenblum doesn't buy into all the talk that a retail apocalypse is underway across the industry. And by including local stores, she said, “you cannot go wrong.”

“The object of the game is to bring in customers and the retailers, and if you bring in the customers, the retailers will follow, and vice versa,” said Rosenblum, managing partner of RSR Research, a retail advisory company.

At this point, the Esplanade is about 85 percent occupied, according to Kohan, which makes it “more stabilized” than some of his other properties.

“It’s not distressed in the meaning that it’s too far out,” he said. “But on the other hand, it needs attention, and we’ve got to get our hands around it sooner rather than later.”

For years, Kenner officials have struggled to find ways to drive activity to the Esplanade Mall, formerly a key source of sales tax revenue for the city.

This summer’s sale marked the fourth time the Esplanade has changed hands.

A group named Cadillac Fairview opened the mall in the early 1980s, and for years it held its own with its main rival, Metairie's Lakeside Shopping Center. But extensive renovations at Lakeside helped it pull well ahead.

In 2003, the Mills Corp. bought the Esplanade from Cadillac Fairview as part of a deal that also included the Galleria in White Plains, New York, and the Northpark Mall outside of Jackson, Mississippi.

Those three malls then came to be owned by Simon Property Group after it merged with Mills in 2007.

By 2016, the Esplanade changed hands again when it was acquired by Pacific Retail in a complicated arrangement that involved two other properties. Under the deal, Pacific Retail and its partners agreed to absorb about $281 million of Simon’s debt, court records show.

Meanwhile, the Esplanade Mall’s fate was a big issue in Kenner’s spring elections, as many candidates said that getting it back into better shape had to be a high priority for city leaders.

The Esplanade, with help from tax breaks from Kenner, landed a Target store and a new 14-screen movie theater in the past few years, joining a roster of well-known retailers like Dillard's, Victoria's Secret and Old Navy.

Kenner officials are eager to get more businesses in there and help drum up additional tax revenue.

“The City of Kenner pays a lot of bills with sales tax revenue, and these holes are killing us,” said Councilman George Branigan. Esplanade Mall is in Branigan’s district. “It’s very important to me.”

Same goes with Kohan, who is optimistic that he can help revive it.

“So far, so good,” he said. “I believe that we are going to be able to turn this mall around, hopefully in a short period of time.”


Follow Richard Thompson on Twitter, @rthompsonMSY.