Tags: Crestwood News
July 16, 2014 - Last of two parts
The decline of Crestwood Plaza is a result of the owner’s failure to reinvest in the shopping center, and not a demographic shift in its customer base, according to a longtime planning consultant for the city.
John Brancaglione, vice president of Peckham Guyton Albers & Viets Inc., or PGAV, outlined the history of the Watson Road Corridor from the early 1980s to the present during a recent meeting of the city’s Economic Development Commission.
The panel, with recently appointed Chairman Grant Mabie, met June 30 for the first time since March 2012.
Brancaglione, who has been involved with Crestwood and the Watson Road Corridor since the early 1980s, attributed the mall’s decline to a lack of reinvestment by the Westfield Group. Westfield, an Australian company, purchased Crestwood Plaza for $106.4 million in 1998.
“... In spite of the fact that Crestwood Plaza always outdid its competitors on either end, and it had nothing to do with not being on an interstate or anything else, it (the mall’s decline) was largely because it wasn’t tended to, like these properties have to be,” he said.
“This isn’t an uncommon phenomenon with regional malls around the U.S., and because we’re seeing a shift in the way people shop — for some things, at least — it’s not unusual. But most of the time when you look at these situations, you’ll see that it was the result of a demographic shift. That hasn’t happened here. You’ve got some of the best demographics within five miles of this mall that you could possibly ask for. So this is not a Northwest Plaza or a Jamestown ... This one, had it been taken care of, I think would still be doing just fine today ...”
Brancaglione anticipates the demise of the mall will continue to have a ripple effect on the rest of the Watson Road Corridor.
Citing the closing of Gordmans, Brancaglione said, “I don’t think Best Buy is far behind. This retailer has been struggling nationally, but they’re pulling themselves up by the bootstraps — but not on the bricks and mortar, but on the Internet side of the equation ...”
He reviewed the effect of the decline on total taxable city sales since 1990. At that time, total taxable city sales were $251 million.
“And think of what wasn’t developed,” he said. “I mean Kohl’s wasn’t built at that point. In 2000, it was $397 million. Now, if we take the 1990 number and convert it via the Bureau of Labor Statistics inflation calculator, that $251 million would have needed to be $330 million in 2000 (dollars) to equal the $251 million. As you can see, it exceeded it by a significant margin.”
In 2013, however, total taxable city sales were $216 million.
“Again, if we take the 2000 number and move it forward, that would have needed to be $537 million, just to stay level,” he said.
Crestwood Plaza, the Watson Road Corridor and Watson Industrial Park, which Brancaglione also said is in a state of decline, pose “big challenges” for the city.
“... The malls of a million square feet are not going to be repeated pretty much anywhere ...,” he said. “The city will need to recognize what the realistic reuses may be for all of the impacted properties. And when I say realistic uses, I’m talking about market reality.
“I would love to see somebody step up to the plate and do a mixed-use development on that site that combines a lot of different things that start to bring some vitality back to the center of the corridor ...”
The problem with so-called “lifestyle” developments is they have not been very successful in the metro St. Louis area.
“... So you’ve got to recognize that significant reuse and redevelopment isn’t going to happen without some kind of financial incentive ...,” he said. “Let’s assume for the moment, you’ve got to tear down the mall. That’s big dollars. And if somebody does it right, they’ll do something like what Centrum suggested, albeit Centrum’s project had a boatload of question marks.”
Centrum Partners purchased the mall from Westfield in 2008 with New York-based Angelo, Gordon & Co. for $17.5 million.
In 2012, Centrum submitted a plan to develop the site as a $121 million entertainment complex with a roughly $34 million request for tax-increment financing and other tax incentives that never gained traction with the Board of Aldermen, which deadlocked on whether to hire PGAV to study the proposal.
Tearing down the mall and “using that masonry and concrete fill and what have you to get that site up so that it starts to get somewhere close to level with Watson Road is a great idea,” he said. “You can’t afford today to do parking garages unless you’re talking about huge density, and when you do, then it gets very, very expensive. And that’s what CBL, who now owns West County Center, has found out.”
Earlier this year, Centrum announced the mall property would be sold at auction in April. In May, Chicago developer UrbanStreet Group closed on the purchase of the shopping center after submitting a high bid of $3.65 million.
“... When the thing went to auction, I had, I don’t know, probably half a dozen phone calls from various developers ... But they all had, at least some part of it, targeted by institutional users. That’s how it was described to me. That usually means hospital, university, someone of that ilk.
“And, again, when you stop and think about it, putting people in significant numbers in the middle of the Watson Road Corridor may not be a bad idea, either, because those people shop. They eat ...,” he said, noting their presence would bolster existing Crestwood businesses.
For the future, Brancaglione said, “(City) staff, this board, the Board of Aldermen, the residents need to have a dialogue about the various strategies that can be used to spur reuse and redevelopment ... When I say strategies, I’m not talking about what goes there. I’m talking about how and the steps that might be involved if you want to provide some kind of an incentive, some kind of a carrot that you’re going to hang out there to try to get the interest started.
“Again, we can all want a lot of things up and down this corridor and in Watson Industrial Park. But in reality, it’s all market driven, and so sometimes the way you get the market to recognize you is to dangle one of those carrots out there. Just because you hang it out doesn’t mean you have to give it away. You don’t give it away unless you get something that you think provides the real impact.”
The bottom line, he said, “... You need to create the impression that you’re willing to consider reasonable reuse and redevelopment proposals that demonstrate to the development community and the end users that you’re willing to provide financial assistance via the tools the Legislature has given you in exchange for a project that you think works ...”
City officials also need to ask the right questions, Brancaglione said. For example, Centrum’s proposal was based on a concept that was successful in Rosemont, Ill.
Rosemont, a Chicago suburb, is next to O’Hare International Airport and situated near a casino, he said.
“... You have all this stuff that isn’t parallel, and so porting that idea here was part of the issue. And I never heard the question asked that way: How does this Rosemont concept you’re proposing going to work here? ...,” Brancaglione said.