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Shopping Centers Today -> January 2003
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FOREST FAIR FINDS A SAVIOR IN MILLS CORP.
By Donna Mitchell
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| Forest Fair, soon to be Cincinnati Mills, has struggled since opening. | |
For years Cincinnati’s Forest Fair Mall dumbfounded the retail development industry with its misfortunes and the efforts of a succession of owners to overcome them. But after numerous restarts, the 13-year-old center has finally gotten what appears to be its best break yet: adoption by The Mills Corp.
Mills bought the beleaguered 1.5 million-square-foot, two-level super-regional — by this time renamed Forest Fair Fashions — in September for $69.4 million. The company plans to rename the mall Cincinnati Mills and is working on some major changes to its retail mix and appearance.
“[The mall] has now got one of the better companies in the country, with a great, proven track record,” said Jim Goldsmith, president of Miami-based Gator Development Corp., which managed Forest Fair for its affiliate Gator Forest Partners. Gator Forest bought the mall in 1996 and held onto it until the sale to Mills. “They can make it, finally, the super-regional mall that it was originally intended to be.”
The new owner’s planned renovations will include such Mills hallmarks as hardwood floors, state-of-the-art TV and a range of popular national tenants. The makeover is to be completed by late this year or early 2004, when Mills expects to officially relaunch Forest Fair Fashions as Cincinnati Mills, said Laura Kelley, a Mills spokeswoman.
“It’s similar in size to many of our other centers, and we think it has a very bright future,” said David Douglas, Mills’ director of corporate communications. “There aren’t other centers nearby that have the type of entertainment and activity-based facilities that we will bring to it.”
Surprisingly, what Mills plans to do to Forest Fair Fashions bears a resemblance to the original plans for the center, which, had they been adhered to, could have sharply altered its fate.
Back in the 1980s executives at L.J. Hooker, the U.S. subsidiary of Australian real estate development firm Hooker Corp., originally intended to build a discount-oriented regional mall with some elements of an outlet center, recalled Boyd Simpson, who was CEO of L.J. Hooker at the time and is now president of the Atlanta-based Simpson Organization, a real estate investment bank. L.J. Hooker signed up Bigg’s Hypermarket and would also have sought such tenants as Marshalls and T.J. Maxx, said Simpson.
But George Herscu, then head of Hooker Corp., stepped in and turned those plans on their head. In 1987 he bought up three department store chains — B. Altman, Bonwit Teller and Sakowitz & Co. When the mall opened in 1989, Herscu installed them as anchors, ignoring the fact that they were untested in the market and beyond the pocketbooks of many in the working-class neighborhood surrounding the mall. These anchors were later joined by Parisian, of which Hooker Corp. was part owner.
To make things worse, the mall was sandwiched between Tri County Mall (Cincinnati’s dominant retail center) about four miles to the east and the 1.1 million-square-foot Northgate Mall some six miles to the west, noted Stanley L. Eichelbaum, SCMD, president of Cincinnati-based Marketing Developments, an international retail development consulting firm.
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L.J. Hooker opened Forest Fair with almost 200 stores in March 1989, dismissing the ripples Herscu had caused in the retail development community by stocking the mall with his own anchors.
“If I’m successful, everyone will say, ‘Oh, what a great guy.’ And if I don’t succeed, they’ll say, ‘What a damn fool,’” Herscu told The Cincinnati Enquirer in February 1989.
He didn’t succeed. Three months after the mall’s opening, lenders withdrew their support; Herscu was forced to sell, weighed down by enormous debt from the purchase of the department stores and a $50 million cost overrun that brought the mall’s development cost to $250 million. Herscu, L.J. Hooker and the mall’s four anchors all filed for bankruptcy protection later that summer. By the fall of 1990, B. Altman, Bonwit Teller and Sakowitz had closed for good. Parisian survived the massacre and was sold to Profitt’s, now Saks. In December of that year Herscu was convicted of bribing a state official in Australia and served about half of a five-year jail sentence.
The half-empty mall, however, struggled on. In January 1991 L.J. Hooker’s seven lenders took over the center under a limited partnership and attempted to revive it. They assembled a team of experienced shopping center professionals to run the center, consisting of Eichelbaum; John P. Boorn, former chairman of JMB/Federated and Campeau Development, and current chairman of Minneapolis-based Madison Marquette; and Michael F. Kelly, former chairman of Center Cos., which General Growth Properties bought in 1989.
The team divided the mall into four retail theme areas: fashion, lifestyle, value and entertainment. It added an $8 million restaurant and bar expansion called the Festival at Forest Fair, located in the former Bonwit Teller space. Kohl’s opened in the former B. Altman, which boosted mall occupancy to 75 percent by September 1994, according to The Cincinnati Enquirer.
In April 1996, once the mall was considered to be back on its feet, the banks that had taken it over sold it to Gator Forest Partners for $18.3 million, according to the Hamilton County auditor’s office. Gator renamed the property Forest Fair Fashions and brought in Glimcher Realty Trust as leasing agent.
In another hiccup for the mall, however, the two companies went their separate ways shortly afterward. Gator Development’s Goldsmith speculated that Glimcher wanted to focus on its Polaris Fashion Place, a 1.5 million-square-foot luxury regional mall that opened in Columbus, Ohio, in October 2001.
“[Forest Fair] did not fit into our long-term strategy,” was all that Clare Calabrese, Columbus-based Glimcher’s vice president of marketing, would say about her company’s brief relationship with Gator.
During Gator Development’s watch, six anchors were added: Bass Pro Shops; Burlington Coat Factory; Kohl’s; Media Play, a books, music and DVD seller; Saks Off 5th; and Wonder Park, an amusement area for children. Gator brought in Spiegel in late August and at press time had a Babies ‘R’ Us store scheduled to open sometime in the spring of 2003. The company also added a 10-screen Showcase Cinema and an 8-screen Super Saver Cinema.
Gator’s improvement of the anchor and tenant mix still leaves much to be done at Forest Fair, according to Eichelbaum. “Considerable progress has yet to be made in the area of tenanting and the interior environment,” he said.
Now it is up to Mills to position Forest Fair for its best shot ever at success, market players say. The mall already possesses elements of a traditional Mills project, notably its fashion, lifestyle and value-retail theme areas mixed with entertainment. Further, Mills is familiar with a number of the Forest Fair anchors, which are also in some of its other properties.
Mills’ real challenge will be to expand Forest Fair Fashions’ limited selection of small-shop tenants, said Eichelbaum. Occupancy lags among the mall’s small tenants, but that represents an opportunity for Mills to assemble an impressive lineup.
“The issue,” said Eichelbaum, “is whether they can make it their usual regional draw.”
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