What will take the place of Sears at University Park Mall?

MISHAWAKA — As customers these days browse through the liquidation sale inside University Park Mall’s Sears store, bright yellow banners sway from the ceiling proclaiming that all merchandise must go.

The iconic department store, which has anchored the southwest end of the UP mall since its inception 40 years ago, will close in October. It was a predictable fate for the store in light of the national retailer’s complicated and unsteady financial future after declaring bankruptcy nearly a year ago.

The Sears department stores in Mishawaka and Merrillville are the last ones left in Indiana.

But while the closing of the Sears at 6501 Grape Road is finally imminent after surviving multiple waves of nationwide closures in recent years, the future of the more than 193,000-square-foot shell it will leave behind on 16 acres of land still owned by Sears’ parent company remains a mystery.

The changing landscape of brick-and-mortar retail sales in the internet age, as well as potential shifts in business philosophy by mall ownership complicates the matter further.

“Either the building will go through a massive change, be torn down or a bit of both,” said Tim Mehall, vice president of retail services and principal at Cressy Commercial Real Estate.

Mehall predicts that Simon Property Group, which owns UP Mall along with shopping centers throughout the country, will try to buy the Sears property and ”make a big effort to redevelop that whole west side of the mall,” calling it “a big opportunity.”

Still, what that “opportunity” will look like five years from now, remains to be seen.

Similar situations

University Park Mall is far from alone when it comes to losing an anchor store.

In 2016, the Sears at College Mall in Bloomington, Ind., closed after 51 years in business there.

The mall, which is also owned by Simon, used its Sears closure as a springboard for a massive overhaul that included an outdoor shopping experience called “The Boulevard,” The Herald-Times reported.

The Sears footprint was demolished and a Fresh Thyme grocery store took its place, along with other tenants that include Ulta, Men’s Warehouse, OrangeTheory Fitness, Pure Barre and Anytime Fitness. The new format in Bloomington matches what Simon has been moving toward when it comes to filling vacancies.

“Having been in business for 60 years, you learn that retail is always changing,” said Les Morris, director of corporate public relations with Simon Property Group in March. “We’re getting some Sears’ spaces back in other markets, but we’re adding more experiential places, such as restaurants and fitness businesses and understand that each market is different. It’s an exciting time.”

The Bloomington project is also similar to a transformation 12 years ago at UP Mall when Marshall Fields, another of its anchors, closed. The building was torn down and led to the development of The Village at University Park Mall, which now includes Barnes & Noble, Bar Louie and Jared jewelers among others.

It was the most significant exterior change to the mall since it opened in 1979.

In 2013, a multimillion-dollar interior renovation of the mall began, updating many fixtures, eating areas and updated colors. Before that, the last major interior renovation took place in 1996, when Tidbits Field Food Court was added to replace the former General Cinema Theatre entrance.

In Indianapolis, the Circle Centre Mall lost clothing retailer Carson’s as a tenant in 2018. The retailer served as the only large anchor for the downtown mall — also owned by Simon — after Nordstrom closed in 2011, the Indianapolis Star reported. In fact, The Star newspaper has since moved into renovated office space in the former Nordstrom. Just this month it was announced the Carson’s portion also will be converted into office space.

Other malls throughout the country have converted such spaces into workout centers, movie theaters and restaurants.

However, the size of the UP Mall Sears is an obstacle. The two-story, 193,188-square foot building is more than double the size of both the Bloomington and Indianapolis renovations. It is also a healthy chunk of the overall UP Mall footprint.

Since Sears corporate owns the property, it still isn’t clear if Simon is interested in buying it. A contract between the two businesses may exist and can ultimately affect the outcome.

A representative with Simon Property Group did not respond to several calls and emails for comment. Larry Costello, public relations director for Transform Co., which also owns Kmart stores, declined to comment on the future of the UP Mall Sears property.

Whatever happens, it will likely take years of discussion and planning to materialize.

“When you’re doing something new … that’s going to take time,” said John Talbott, an associate director of the Center for Education and Research in Retailing at Indiana University’s Kelley School of Business. “It’s not going to get fixed overnight and it’s going to take time and effort.”

Chance to reinvent?

The Bloomington model seems a stretch considering the proximity of multiple major grocery chains to UP Mall. And considering Circle Center is in the heart of downtown Indianapolis, office space there could have broader appeal than on Grape Road.

Another large department store, perhaps? Considering retail’s trend, that would seem an even longer shot, experts say.

UP Mall has had success replenishing vacant storefronts with outside-the-box retailers and pop-ups, but nothing to the scale of an anchor.

“An anchor store closing with the traffic it brings is a much more serious challenge,” said Mitchell Olsen, professor of marketing at the University of Notre Dame’s Mendoza College of Business. “Taking away all that traffic can precipitate a decline of traffic to the rest of the mall.”

That, Olsen, said, could lead to additional store closures and even diminish monthly rents.

“Then you get into sort of mall death spiral,” he said. “It is a pivotal moment in University Park Mall’s history.”

Or, Olsen continued, Sears leaving offers the chance for UP Mall to reinvent itself.

Whatever fills the space will ultimately be a part of a lengthy process.

It’s no secret, however, that foot traffic through Sears has continued to wane over the past decade, so it’s unclear how its pending closure might affect shopping patterns elsewhere in the mall.

“I can’t remember the last time I shopped at Sears for something other than tools and I can get those at other home stores,” said John Mester, a real estate broker with Cressy. “Most people are going to remember shopping there with their parents. So, nostalgia might be one of these things that people will feel, but I think we have plenty of other options and places to go.”

Fill the space?

Cressy brokers Mehall and Mester threw out possible tenant ideas such as a gym, movie theater, grocery store or several smaller retail stores. One big name tossed out there was Dave and Buster’s.

The national chain of popular entertainment restaurants consists of arcade games and theatres, while visitors can also enjoy dinner. The closest Dave and Buster’s to UP Mall is in the Chicago area.

According to its website, the prototype for the restaurant needs to have about 40,000 square feet with space for 250 seats, 400 parking spaces and a two-level storefront. The Sears location nearly checks all the boxes, except for the fact that it is nearly five times too large.

That, coupled with the fact that South Bend’s metro market of around 600,000 people would easily be one of the lowest in the chain, could prompt additional hesitation.

A representative with Dave and Buster’s did not return several phone calls from The Tribune regarding this story. According to Mester, however, the Dallas-based business has inquired into the Mishawaka market before.

“They took a sniff about two years ago at the former Cinemark (Movies 6 site behind Best Buy),” Mester said. “Dave and Buster’s representatives were in town. They were telling us they were excited about it on the phone, but then it fizzled. They look at demographics and disposable income of the area and this is one of those things where you need that traffic to continue in the area to attract those types of businesses.”

For now, the future of the building is in Sears’ court as the company finishes closing the store and figures out what to do with it.

One thing most retail officials seem to agree on is the closing will eventually be good for area.

“The Sears void won’t be hard to fill,” Mehall said. “And what it means for the local consumer, is it goes back to being an opportunity and it’s going to provide something for the regional consumer and provide another shopping experience or entertainment for the area.”