Archive for year: 2018

Benjamin Widlanski, of counsel, focuses his practice on complex commercial litigation and class actions. He has extensive courtroom and trial experience, prosecuting and investigating hundreds of federal crimes.

Click here for the original article.

By Paige Yowell

Younkers’ demise will leave a hole in Omaha’s retail scene for many people looking for shirts, dresses and cosmetics all in one place.

But Omaha’s indoor malls may be feeling the greatest loss from the department stores’ departure: When the Younkers stores close, what will take their place?

People in the real estate and retail businesses say the loss of an anchor store like Younkers at shopping centers across the country — including at Westroads and Oak View Malls in Omaha — will present a challenge for landlords in an environment where it’s more common to hear of a retail chain declaring bankruptcy than it is to hear about one expanding.

Younkers’ parent company, Bon-Ton Stores Inc., declared bankruptcy in February. Liquidation sales already have begun, and stores are expected to close in the coming months.

Those plugged into Omaha’s retail scene say the loss of the stores will likely hit Oak View Mall hardest. The mall hasn’t seen the same improvements Westroads has and has lost more stores than it has gained over the past few years.

General Growth Properties, a Chicago-based real estate trust, owns both Omaha malls.

The loss of an anchor can send malls spiraling, as the anchors often bring in foot traffic and customers who then shop at other stores in the mall.

Oak View’s occupancy rate in 2016 was about 85 percent, a figure that’s considered weak in the industry. Among General Growth’s malls nationally, Oak View had one of the lowest occupancy rates. General Growth owns more than 120 malls across the U.S.

Westroads, on the other hand, had an occupancy rate of 98 percent, according to General Growth’s latest annual report, from 2016.

General Growth didn’t respond to requests for comment from The World-Herald about its Omaha properties. Westroads Senior General Manager Jim Sadler declined to comment.

Complicating matters: Westroadsdoesn’t even own the Younkers space. Instead, the land and building are owned by Realty Trust Group of Lincoln. The firm has owned the property since at least the early 1980s, said Robert Weigel, the firm’s president.

Weigel said in an interview that his company saw the writing on the wall with Younkers and has a plan in place to repurpose the Westroads space with new retail tenants. He said he was unable to discuss what specific retailer might take the space, citing confidentiality agreements with potential tenants.

Weigel said he expects to split the space up and lease it to other retailers.

“Retail is what it always has been, and basically what I think it should be,” Weigel said.

General Growth “doesn’t want to see it vacant, either,” Weigel said. “But I haven’t talked to them about it. We’ve got our contingency plans in order.”

Weigel said he has a good relationship with General Growth, which bought Westroads in 1997, but his firm has traded jabs with the mall’s owners and its tenants over the decades.

Realty Trust Group sued in 1998 over construction of the new Jones Store at the old Montgomery Ward site. Jones’ owner, May Department Stores, sought permission to tear down the old Montgomery Ward auto bay to make way for more parking. Weigel protested with a lawsuit, saying it was illegal for May to demolish a building on property it didn’t own. He lost the suit. Younkers relocated to the property after the Jones Store closed in 2004.

His firm also tried to block construction of the Von Maur store and construction of the Cheesecake Factory at Westroads, saying Von Maur would adversely affect sales at Montgomery Ward and, later, that Cheesecake Factory would adversely affect customers of Younkers. Both plans eventually prevailed.

Weigel also owns several properties along O Street in Lincoln, including one that was recently redeveloped to include a Fresh Thyme grocery store and Cheddar’s Scratch Kitchen. His firm also owned a shuttered Hy-Vee at 70th and O Streets in Lincoln that was eventually converted into a Best Buy store. He said his firm owns property in Florida as well.

He said he and his wife had been customers of Younkers over the decades and he’s sad to see it go.

“You hate to see a bankruptcy or liquidation,” Weigel said. “It’s sad; it’s sad for the operators and for the customers.”

Regardless, Westroads is well-positioned to attract another retailer or use for the site, said Trenton Magid, executive vice president of NAI NP Dodge and a member of the Omaha Planning Board. The Younkers store there has West Dodge Road frontage, and General Growth has invested in the mall with renovations, a new food hall and additions like The Container Store and H&M.

For Oak View, Younkers’ departure could spell trouble. The mall already has seen many retailers leave, due to bankruptcy or downsizing. Some malls also have lease clauses that allow for other retailers within the mall to pay a lower rent if an anchor closes, Magid said.

“I question the current ownership’s long-term plans,” Magid said. “It doesn’t seem like General Growth is investing in Oak View like they’re investing in Westroads. At the end of the day, if there’s a last mall standing, it’s going to be Westroads.”

Jeff Green, a partner at Lincoln-based retail site-selection firm Jerry Hoffman Strategy Group, agreed.

“Anybody in our industry recognizes that is not a long-term location, so how can they lease it?” Green said of Oak View. “They’re not going to be able to,” at least not to a retailer, he said.

Any retailers eyeing the Boys Town West Farm mixed-use development under construction near 144th Street and West Dodge Road would likely be looking at Westroads’ Younkers space, Green said. Westroads has the ability to pull customers from the entire Omaha area and as far as Lincoln.

“That’s the strongest retail magnet in town, so why not go there?” he said.

Nordstrom Rack, for example, has been eyeing the Omaha market, Green said. A portion of the Younkers store at Westroads could be a good home for the off-price department store chain, he said. (A Nordstrom Rack spokeswoman told The World-Herald that it had no “current plans” to open in Omaha.)

Meanwhile, some malls across the country have seen large anchor spaces repurposed into entertainment or services uses, Magid said, like bowling alleys, paintball courses and gyms. Either way, it will be a costly challenge to split up the 150,000- to 175,000-square-feet spaces, Magid said.

Younkers also has one store in Lincoln, at Gateway Mall, and operates several department stores under the Herberger’s nameplate in Norfolk, Hastings, Kearney, North Platte and Scottsbluff.

As for Younkers customers, Green said Dillard’s and J.C. Penney are likely to see more business from those who shopped at Younkers, but those chains, too, have faced financial trouble over the years.

So has Sears, which “has been on oxygen” for years, Green said. But what will become of the decades-old department store chains still will take a while to shake out, he said. He said he expects Macy’s, which doesn’t operate in Omaha and is similar to Younkers, to continue closing stores.

Bricks-and-mortar retailers have had a rough couple of years. Many, including the Omaha-founded Gordmans department store chain, Toys R Us, Claire’s, Payless Shoe Source, The Limited and others have declared bankruptcy within the past two years.

The retailing world is under pressure from online-only sellers like Amazon but also from customers, whose shopping habits have changed. Customers instead are flocking to off-price chains like T.J. Maxx and Burlington and spending more of their dollars on experiences, like dining out and traveling.

Retailers also have had to rely more and more on discounts and sales to get people into their stores, cutting into profits.

Some companies, like Gordmans, were spared from an all-out liquidation when other buyers (in Gordmans’ case, Stage Stores) stepped in to buy some of the stores. Stage still closed almost all of the Gordmans locations in the Omaha area.

So far, 2018 isn’t looking much better, with Toys R Us and Younkers both unable to find buyers willing to continue running some or all of their stores, said Corali Lopez-Castro, a managing shareholder of the KozyakTropin Throckmorton law firm in Miami who specializes in retail bankruptcies.

“Unless there’s a fundamental change in their businesses, we’re going to see more retail bankruptcies,” Lopez-Castro said. Now that requires a good in-store experience with a highly complementary online presence, she said.

Retail bankruptcies also are more likely to head to liquidation because liquidation firms can make a hefty profit on selling the stores’ inventory — in Younkers’ case, handbags, shoes, shirts, dresses and cosmetics.

“That’s the problem with these retail bankruptcies, that many times, the inventory itself is worth more” than running the company as a going concern, Lopez-Castro said.

While many people might be feeling nostalgic and upset over the loss of Younkers and other Bon-Ton stores, “that feeling is based on your age,” said Green, the retail site-selection consultant. “Because people under 40 weren’t shopping at Younkers, anyway. That’s part of the problem.”

Click here for the original article.