May 20, 2019

Sioux Falls is well positioned to fill vacant space at The Empire Mall, including its two empty former department stores, according to a top executive at Simon, the mall’s owner.

“To me, it’s an ‘A’ mall. There’s effectively no real competition … and in some ways that’s different than pretty much every market we have,” said Jonathan Murphy, Simon’s executive vice president of leasing and strategic projects.

Murphy, who has overseen The Empire and visited the market, called The Empire “one of the crown jewels of the portfolio,” during an interview in Las Vegas today coinciding with the retail real estate industry’s largest annual gathering, RECON.

“It performs very well. We have data that would tell you our customer drives from 150 miles in some instances to come to the mall,” he said.

“If you exclude anything that’s gone away from bankruptcy that was an immediate liquidation, the mall is actually quite well leased, and I think that goes to show the strength of the mall.”

Both Younkers and Sears closed in late August 2018. Other retailers that are closing or have closed in recent months because of bankruptcy include Payless ShoeSource, Gymboree and Charlotte Russe.

Dillard’s, which Simon announced last year would fill the vacant Younkers space and add 40,000 square feet, is still on track, Murphy said.

“We still feel confident that will ultimately get done. That’s all I’ll say for the time being, but we don’t put something out there if we’re not confident about it. Both companies have consented (to the announcement).”

Additional information likely would need to come from the department store, which has not taken out a building permit yet and originally said it planned to open by the end of this year.

“Everyone has their process. It’s their store. We’re providing them the real estate,” Murphy said.

Dillard’s has not responded to a request for an update.

Filling one department store space with another department store typically is at least an 18-month process, Murphy added.

“This is standard. It appears like it’s taking awhile, but this is what we do. There’s no doubt we’re long on all our properties, and we’re especially long on Empire.”

The Sears site provides opportunity for additional redevelopment. When a project involves demolishing a building and new construction, those timelines typically start at two years, Murphy said.

“Are there opportunities for uses other than retail? The answer is definitively yes. I’m not specifically saying Empire, but Empire and other comparable properties. We’re doing a bunch of hotels. Some of them we own and operate and some of them we joint venture with a partner. We’re doing residential, office, and hotel is definitely something. And it can be a hotel that has an entertainment component to it.”

The goal is to add attractions that bring in people from farther away and more frequently, he said.

“If our trade area is 150 miles, we’d like to open it up to 250 miles and bring more people. We’re doing these things to reinforce the shopping, but the more trips you can get people to make to the property that’s the name of the game.”

With the Sears site, “there’s plenty of interest,” he added.

There’s also strong interest from retailers in leasing vacant space within the mall, Murphy said. Many of them have been drawn to Sioux Falls because they have seen online orders come in from the area.

“You look at lululemon, Athleta, those people wouldn’t have five years ago been convinced to come to the market,” he said. “But they see the demographics and see they can operate in the market, and it’s great.”

Simon, the world’s largest retail property owner, has $1.5 billion to $2 billion in redevelopment planned each year, Murphy said.

“I assure you Empire is in that pipeline and in those plans, and that goes out multiple years,” he said. “Everything takes time, but we’re invested in our product and we’re going to continue investing like nobody else, and we have the capital base to do it.”

Space to spare: National retailers looking at Sioux Falls have location options, if they want them