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McClatchy-Tribune  08/26/2014 6:17 AM ET
Washington Square Mall under new management [The Indianapolis Star :: ]

Aug. 26--An out-of-state real estate services firm has taken over management of Washington Square Mall from longtime owner Simon Property Group, raising significant questions about the future of the struggling shopping center.

The mall's manager, Jones Lang LaSalle, would not comment on its future, but other local malls relinquished by Simon, including Lafayette Square and the former Eastgate Consumer Mall, fared poorly.

What will happen to Washington Square is a concern to Eastside shoppers and neighboring property owners, but Simon isn't talking about its future.

"We don't have any comment," said Simon spokesman Les Morris.

Simon, one of the largest mall operators in the world, didn't list Washington Square as one of its 115 U.S. shopping malls in its second-quarter financial filing with the Securities and Exchange Commission, and the mall has been removed from the company's website.

Washington Square, 10202 E. Washington St., is one of the city's oldest enclosed malls. It opened in 1974, and Simon acquired it in 1996 as part of its merger with Ohio-based DeBartolo Realty Corp. Simon tried to give the mall a boost with a major renovation in 1999.

But by last year, occupancy slipped under 50 percent, which is far lower than Simon's overall portfolio occupancy of more than 95 percent, according to company data it releases as a publicly traded real estate trust.

The mall was in a leasing tailspin even before the recession of 2007-08 claimed Macy's department store and apparel stores Gap and Steve & Barry's. Before the recession hit, major retailers J.C. Penney, Old Navy and Lazarus had already bailed out.

Major retailers still open in the mall include Sears, Target and Dick's Sporting Goods.

Concerns about the property arise from its heavy debt load. Last year, Simon's financial filings showed the company held $25.5 million in debt on Washington Square, which appears to be more than the mall is worth. In a dispute with the Marion County assessor, Simon contends the property is worth about half that.

Large retailers have struggled on the Eastside since the end of the 1990s.

Many consumers have preferred shopping farther north, at Simon's Castleton Square Mall and Fashion Mall at Keystone. Simon's upscale Circle Centre mall also has lured shoppers Downtown.

Bill French, a principal at Cassidy Turley real estate services firm, said the Eastside can be a challenging environment, but noted malls in many cities have struggled to compete with digital shopping, mega stores, discount outlet centers and open-air neighborhood retail centers.

Still, French thinks the Eastside can support the mall, though new owners might have to fill empty space with nonretailers such as offices, social services and medical tenants.

"You'd like to see the mall become successful and remain a strong component with the community over there," French said.

Jeff Roberts, a retail leasing broker for Sandor Development, which owns Cherry Tree Plaza and three other retail centers near Washington Square, expressed confidence that the mall would survive and be redeveloped with a new mix of tenants.

"The mall's anchored by Target, they're not going to go anywhere," he said. "Hopefully Jones Lang LaSalle has some experienced retail leasing guys that have worked on redevelopments."

Several tenants contacted by The Star declined to comment on the uncertainty over the mall's ownership or said they didn't know anything about it.

Two shoppers outside the mall Monday weren't ready to give up on Washington Square, saying they'd like to see the mall revitalized with new tenants.

"Hopefully they'll revive it. I wish they would update it. Castleton and Greenwood (Park Mall) have gotten huge makeovers," said Carrie Swails, 27, Greenfield, as she walked out of Target.

Alex Smith, 33, of Indianapolis said he's begun shopping in Greenwood and at Walmart because he thinks Washington Square has become rundown.

"It's changed a lot," he said, sitting in a bus shelter in the mall's parking lot. "They let the floors go down and the bathrooms have gotten a lot worse. Hopefully somebody else will take over, somebody better."

Call Star reporter Jeff Swiatek at (317) 444-6483. Follow him on Twitter: @JeffSwiatek.

 

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