New owner re-energizes Sioux Falls’ Empire Mall

SIOUX FALLS, S.D. — When the world’s biggest player in an industry comes to town, change becomes almost inevitable.

The Empire Mall has shown signs of it all year since Indiana-based Simon Property Group Inc. bought the property from The Macerich Co. on Jan. 1.

Simon, the country’s largest mall operator and the world’s largest real estate company, is putting its stamp on the 37-year-old property.

There are new tenants, many born of relationships between national retailers and the real estate giant. There is a new approach to marketing the property, including a kids’ club. And there likely will be more announcements of new retailers in the weeks and months ahead.

“Simon is very aggressive with their leasing, and their relationships are really unlimited because of their size and scope of their business,” said Dennis Gilliam, The Empire Mall’s general manager. “For most retailers, Simon is their largest landlord. So with those connections and relations, it’s easier to make those deals.”

Gilliam, who has been overseeing the mall for five years, is prohibited from releasing sales figures or occupancy rates.

“I can tell by sales our traffic is up, but that’s about all I can say,” he said.

Simon’s total revenue per square foot was $554, according to the company’s second-quarter earnings, nearly a 10 percent increase compared with a year ago. Its properties were 94.2 percent occupied.

Simon’s size is a factor in attracting retailers, said Jesse Tron, a senior communications and media specialist for the International Council of Shopping Centers.

“It absolutely helps when you’re bringing a large, key industry player that is managing the property,” he said. “It makes the property more attractive for potential tenants.”

While some leases can be adjusted, The Empire Mall has few empty spaces for retailers. That’s partly because of an approach Simon took to filling the wing formerly occupied by F.Y.E., a large entertainment media store that moved out in early 2011.

Former owner Macerich had asked the mall to leave the space open while it went after a large retailer, but Simon decided to start leasing to smaller, local businesses.

“Of course, that (a large retailer) is still always a possibility, but we have all these opportunities to fill in and make the company some money while we’re waiting for that opportunity to show up,” Gilliam said.

One of those new tenants is the Xcite Family Fun Center, which relocated to the mall from a strip mall earlier this year and took 17,000 square feet of the former F.Y.E. location.

“We’ve seen about a 40 percent increase in open admissions, which is excellent,” owner Desiree Hansen said. She credits the increased visibility of the mall and a boost in business from grandparents, who were introduced to Xcite while walking in the mall.

Xcite was able to expand its arcade and toddler play area, adding an inflatable and ball pit. Hansen signed a one-year lease but would like to be there “significantly longer,” she said.

Her success represents a growing trend in malls nationwide, which are finding entertainment-based anchor retailers encourage more visitors and keep them on the property longer.

“It’s undeniably true that we’re looking for new uses for space within malls and many are entertainment-focused,” said Les Morris, Simon’s director of public relations. “We’ve expanded the presence of Legoland on many properties. A couple have aquariums, and those are great.”

With Xcite as an anchor, that wing of The Empire Mall is so filled with retailers that one even moved into a former storage space.

The owners of Offbeat Glamour are among the newcomers. Lori Charette and her daughter, Amanda, moved to South Dakota from Florida because they heard the business climate was better.

Their salon uses a retro decor with a checkerboard floor and has unique services including hair tattoos and a “jelli bath” pedicure.

“We’re growing every week,” Lori Charette said, adding that the challenge has been teaching customers that her wing of the mall now is filled.

“Even for people who are looking for us, it’s just a mental block,” she said. “But on the flip side, we absolutely love where we’re located near the door so clients can come in and out.”

The average American mall shopper is a 32-year-old woman who visits for an hour, 1.7 times per month, and spends $50 each time. That’s according to a 2010 study by the International Council of Shopping Centers, the industry’s largest trade organization.

Two of every three mall shoppers are women.

Many new retailers at The Empire Mall serve that demographic. Women’s apparel store White House Black Market set up shop in August, and Soma Intimates will open soon.

“Women’s clothing has always been the lynchpin that holds a shopping center together,” Gilliam said. “It’s an ever-evolving mix.”

It’s an evolution Mary Fisk has watched from behind multiple women’s registers as she has worked at various mall retailers since 1998. She’s now the assistant manager at Bohme Boutique, a growing chain that opened here last fall.

“You could go to almost any mall in the country (in 1998) and find the exact same stores,” she said. “Now what’s exciting is you’re seeing a whole different look in the mall. We never would have had a store like this when I started.”

The Sioux Falls retail scene also is more competitive, she said. There’s more shopping downtown and in neighborhood centers. As a gathering place, the mall draws more teenagers than adults, she said.

“That maybe has changed a lot because there are just so many more options for people to go to,” Fisk said. “But the emergence of younger shoppers has changed the dynamics of the mall. Sixteen, 18, 20, it seems like they have a lot more money to spend.”

Wet Seal is one new retailer opening soon for a younger demographic.

Fisk also praised the relocation of Applebee’s and Xcite for bringing in more families and keeping people on the property longer. She has a lot of good things to say about new owner Simon, too.

“I think they see the mall has to move forward and have new, exciting stores that are unique,” Fisk said. “This cannot be the same mall we knew years ago.”

The Empire is a 100-acre campus with additional restaurants and retailers on the property. The Empire East across Louise Avenue from the main campus likely will have a new tenant in the space vacated by Applebee’s and Jo-Ann Fabric & Crafts, which is moving out later this year.

“We’ve talked to several people and had interest, but we were kind of waiting on the right one and I believe we’ve found that one,” Gilliam said.

The mall also has land available for a building near Toys R Us and Texas Roadhouse. There hasn’t been much interest in the past, but some has sparked lately.

“If the economy does turn upward, I think we’ll have a lot of interest,” Gilliam said. “Traffic patterns make a lot of difference, and it’s become very evident traffic is going to increase on 49th Street.”

There’s also a changing plan for redeveloping the former TGI Friday’s site. Hegg Cos. Inc., which owns the nearby hotels, no longer is looking to build a conference center there.

“At that time, the retail market was so bad,” said Paul Hegg, president and CEO. “Now, it seems to be getting stronger, and there seems to be more activity in the marketplace.”

Hegg would like to sign a full-service restaurant for the one-acre site, but he’d also look at several smaller fast-casual restaurants.

While Simon’s Morris hasn’t visited The Empire Mall, he said corporate representatives were in the region recently and had good things to say about properties the company had acquired.

“They said, ‘These are really good properties.”’

Simon’s reputation in the industry likely will cause more growth for the Sioux Falls property, he said.

“They (retailers) know we pour money back into our properties,” Morris said. “We keep them fresh. We reinvigorate them when that’s needed. We’ve got the capital to do that, so they want to be at our properties.”