There's 'no panic' as retailers flee Circle Centre

There's a temporary wall around the space where people used to dine at Johnny Rockets. Farther down the hall, mall advertisements hang in the shuttered windows of a 20-year-old Gap store. Ditto for Abercrombie & Fitch, which disappeared overnight in January.

You might not recognize Circle Centre if you haven't visited in a while. It's not a dying mall. The occupancy, not to mention the profit, remains too high for it to fit that classification. But an exodus of retailers during the first few weeks of the year has raised the same old questions about the Downtown Indianapolis mall.

How long can Circle Centre remain in its current form? How many more big-name stores will shutter? Will Carson's eventually close, leaving the mall with no anchor department store? What about adding apartments or condos?

There are no answers, at least not yet. A $20 million proposal to modernize the shopping center and possibly add a residential tower is awaiting approval from mall stakeholders, a process that has been reset under new Mayor Joe Hogsett. Angela Smith Jones, the city's deputy mayor for economic development, said the Hogsett administration has yet to thoroughly review the mall.

"We're starting from scratch," she said.

Although the city doesn't have an ownership stake in Circle Centre, it owns the land that the mall sits on. The city also committed to paying nearly $1 million to subsidize anchor tenant Carson's operating expenses and keep it open through January 2018. That gives manager Simon Property Group Inc. and the rest of the mall's owners a little less than two years to determine a path for the mall before possibly losing its biggest store. The city is open to uses beyond retail, Smith Jones said.

"The retail landscape is changing, so there's going to be, I'm sure, different ideas on how to continue to move forward and keep it a vital part of the Downtown area," she said.

The shifting retail scene is apparent throughout Circle Centre. At least eight national retailers have closed this year: Abercrombie & Fitch, American Greetings, California Pizza Kitchen, Gap, Gap Kids, Johnny Rockets, Johnston & Murphy and Yankee Candle Co.

Those closings weren't necessarily statements about the viability of Circle Centre or malls in general. Gap Inc., for instance, is closing 175 stores nationwide amid falling sales. Abercrombie & Fitch has been on retail death watch for more than a year.

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Although Circle Centre can't be blamed for the performance of national retailers, it will continue to suffer from their failures. Finish Line Inc., the Indianapolis sportswear retailer, is another Circle Centre tenant facing troubles. Finish Line announced in January that it plans to close 150 stores, or about a quarter of its locations. It has yet to disclose which stores will close, but CEO Glenn Lyon offered a strong clue as to where its priorities are.

"We plan to selectively open new stores in the best-of-class malls and invest in our top stores to strengthen customer experience," Lyon said in a January conference call with investors.

Circle Centre — and the urban shopping center in general — doesn't fit many experts' definitions of a best-in-class mall. Lyon's statement echoes a trend in which retailers that are facing intense pressure from online shopping and brick-and-mortar competitors are focusing on affluent shopping centers such as Fashion Mall at Keystone. Several retailers that have closed at Circle Centre still have stores at Fashion Mall, another Simon property.

Nonetheless, the group of 19 Downtown businesses that own Circle Centre are not retreating from retail. Simon, which owns a 14.7 percent stake in the mall, declined comment. But Susan Ridlen, assistant treasurer at drugmaker Eli Lilly and Co., one of the mall partners, said Simon has already leased more than half of the retail space that has been vacated since the beginning of the year. She declined to disclose tenants that haven't already been announced.

"Right now, there's no panic," she said. "A good portion of tenants that have left, the space already has (been leased), and the ones that haven't been filled yet, Simon is actively working on it."

Simon, the largest mall owner in the U.S., is especially having success finding dining and entertainment retailers for Circle Centre. Punch Bowl Social, a 23,000-square-foot restaurant, bar and entertainment concept, is on pace to open in the fall. And Pittsburgh sandwich shop Primanti Bros., which has a sports bar theme, is slated to replace California Pizza Kitchen in the fall. Nada, a modern Mexican restaurant, is scheduled to open by March.

Simon also is taking small steps to increase foot traffic to Circle Centre. Simon is planning to open a new Georgia Street entrance between Meridian and Illinois streets by midsummer. The move is meant to open the mall up to the event space on Georgia Street and attract visitors who are streaming Downtown to conventions and sporting events.

And while big-name retailers are fleeing the mall, Simon is offering flexibility to homegrown shops in order to keep them. Outpost, a pop-up store that sold handmade apparel and accessories from six Indianapolis brands, plans to reopen at Circle Centre across from H&M in the coming weeks. Outpost opened for seven weeks around the holidays, closed in January and has been negotiating with Simon to occasionally reopen on a short-term basis.

Outpost Indy looks to fill in gap at Circle Centre

"I think we've proven in a small way that there's real potential (at Circle Centre)," said Michael Bricker, one of the Outpost partners. "I think the mall gets kind of a bad rap, honestly. It's a nice mall. It needs some updating and needs a little bit better access here and there, but it's not a bad place."

The planned Georgia Street entrance would make a big difference, Bricker said.

"I think part of the problem is it feels invisible," he said. "If you don't know it's there, you could miss it, particularly if you're coming down Georgia Street."

The six brands that sold goods at Outpost were happy with their sales, Bricker said, suggesting there's a future in the mall for homegrown retail. In addition to Outpost, WNS Apparel, a locally owned apparel and jewelry store, will open on the third floor in March, as will a store called #gifts, another locally owned shop that will sell framed prints, signs and local sports jewelry on the third floor next to Banana Republic.

"It's an important part of Downtown and could be a really nice experience," Bricker said. "I think if everyone works together to breathe life into it for its next chapter, it could continue to be a nice place Downtown."

Circle Centre's occupancy rate was 89.5 percent in 2014, the last year for which Simon has reported on the mall's performance. The mall also remains profitable. Simon will release its next Circle Centre report later this year.

Regardless of the latest figures, though, Ridlen of mall partner Lilly said a few store closings don't represent a big change for Circle Centre. The mall already has moved on from the loss of anchor department store Nordstrom, which closed in 2011. IndyStar leased 100,000 square feet of the Nordstrom space, and Brown Mackie College has leased space on the mall's fourth floor, adding office use to Circle Centre.

"When Nordstrom left, that was the big turning point. That square footage has already been reworked, replaced and leased by IndyStar and several restaurants," Ridlen said. "We had to evolve that mall into a multiuse property, and we were able to do that.

"The mall already has evolved. Whether more evolution is going to take place, that's open to discussion about appropriateness, economics, the best thing for the city — all of those factors. I think that's a long-term discussion and something we're talking to Simon about."

Call IndyStar reporter James Briggs at (317) 444-6307. Follow him on Twitter: @JamesEBriggs.