Commercial Space Guide – Greenway Station: Perceptions of Struggling Mall Still Linger
When Greenway Station opened in 2003, it was billed as an upscale lifestyle center, but national bankruptcies and devastating recessions have a way of reshaping any retail entity and its tenant mix. Today, the Center could be in the early stages of a rebound that is unfolding as perceptions of a struggling mall linger. For two years, its largest space — more than 27,000 square feet once occupied by Linens N Things — stood vacant; now, perhaps symbolic of the Center’s new-found traction, Ashley Furniture, one of largest businesses headquartered in Wisconsin, has opened a HomeStore in that vacated space. Merchants on the Center’s east side, where the Ashley space stood vacant for so long, also anticipate more traffic from the opening of Erehwon Mountain Outfitter in space previously occupied by the former Dressbarn, and from the new Chocolaterie Stam. These and other additions have raised Greenway Station occupancy from just under 77% to just over 90% in 2010 alone, filling more than 40,000 additional square feet, and that does not include the 2009 addition of Woldenberg’s, the men’s and women’s apparel shop that represents Greenway’s original high-end aspirations. Even with leasing activity on the upswing, and the retail outlook marginally better than it was in 2009, Corey Kautzky, a general manager with Greenway owner RED Development, knows it will take time for those negative perceptions to evaporate. In this, our annual Commercial Space Guide, we examine the State of Greenway and present 225 commercial property listings with over 9,600 square feet, courtesy of Property Drive, LLC.
Knock on Greenway
Kautzky has heard about all the Center’s failings, real and imagined: Its layout makes no sense; it would be better off enclosed than outdoors; it has no high-volume anchors; the restaurants’ position on the outer ring does nothing to drive traffic to the stores; it’s more high-rent than high-style.
She acknowledges a slight change in the Center’s brand. The term upscale brings to mind designer shoes and apparel, and eclectic local boutiques, and while Greenway has an assortment of those, they don’t dominate the landscape. “Mid-to-upscale,” Kautzky said, noting that the Center wanted to bring in more stores with mid-level price points and more shops that are exclusive to the Madison market.
With some of its national stores moving due to bankruptcy, downsizing, and merger activity, the perception is that Greenway is struggling, that it was the Center’s fault when nationally known retailers like Sharper Image, OshKosh B’Gosh, and NordicTrack, in addition to restaurants like Big Bowl, Romano’s Macaroni Grille, and Boston’s Pizza pulled up stakes. What the public doesn’t realize is that some of those entities — Kautzky cited Macaroni Grill in particular — actually fared well at Greenway, but were closed due to sagging national sales.
“I think with any new center, and we’re seven years old now, it takes a while to find the right tenant mix, so I do think we’ve struggled with some of that,” she said. “We’ve had a very unlucky batch of national bankruptcies, and often times I feel the local perception is that the local store wasn’t performing well, and that’s Greenway or that’s Madison. A lot of times people will see that and not realize the whole story, that it’s a nationwide or region-wide thing.”
Owned by RED Development since its inception, Greenway now has several junior anchors of 10,000 square feet or more — DSW, World Market, Marshall’s, Orvis, and now the Ashley Furniture HomeStore. Kautzky, who once worked at Hilldale and at one of Wisconsin’s most bustling lifestyle centers, Milwaukee’s Bayshore Town Center, said several of Greenway’s anchor stores are among the top sellers in their respective districts.
In addition, sales at Greenway’s nine women’s ready-to-wear stores are up just under 5% through July, with several having double-digit increases compared to 2009, Kautzky said.
Still, the junior anchors aren’t the high-volume traffic generators that drive traffic at Greenway’s main competition, West Towne Mall. Store operators like Marvin Prue of Woldenberg’s wouldn’t mind seeing a grocery store, and several people IB spoke to believe a specialty food store like Trader Joe’s would hit the mark.
“We talk to a lot of folks,” Kautzky said, “and we have talked to Trader Joe’s. We do have space available in what we call our ‘Building A lot,’ which is to the right of where Claddagh [Irish Pub] is. So with that lot, we have room for expansion should we find tenants that would be a good fit. Obviously, anything that’s a good traffic driver is something we’re looking for, so a grocery store or a smaller movie theater experience.”
What about a larger Marcus multi-screen theater like the one that will be built in Sun Prairie? “That has actually been discussed, with us having a parking deck in that area,” Kautzky said. “We don’t eliminate anything. We have a lot of discussions going on with different tenants.”
While more customer traffic obviously is preferable, some Greenway stores boast of higher per-trip spending, which doesn’t require the same volume. The evidence is largely anecdotal, but Kautzky said it’s not unusual for stay-at-home moms, a key Greenway demographic segment, to drop $600 on a daily trip. Woldenberg’s was lured away from Hilldale in October of 2009, and one recent morning, Prue’s first two customers, including one who bought a gown for a wedding, spent a combined $933. A banker friend came in and purchased a new suit for $1,000 for his son’s wedding in New York, and another woman recently traveled from Milwaukee and bought a $3,000 dress.
Prue, who calls the 105-year-old store a miniature version of Saks Fifth Avenue, goes to New York four times a year to meet with a buying office that guides him in the purchase of upscale brands like Kate Spade for women and Hart Shaffner and Marx for men. Most, but not all of his Hilldale customers, have followed him to Greenway Station. In a concession to economic realities, he is offering merchandise at lower price points. “Business isn’t bad,” Prue said, “but it isn’t like it was in the old times, before 2008. The thing you have to do in a recession is lower your fixed costs, so you don’t have to do the volume of business that you did in 2005, 2006, and 2007.”
Existing store operators like Prue, Michael Castanget (community director of the Me We Market), and Jamie Osborn (co-owner of Endurance House) are happy they chose Greenway Station. Osborn, for example, wanted to give his fitness-conscious customers a better overall shopping experience, and that’s one of the reasons he believes he’s getting value for the higher rents he pays at Greenway. Having access to onsite management is another. “Could I be doing the same amount of business paying $5 or $10 less per square foot? I don’t know, but Greenway has definitely met my expectations,” he said.
Not every local store had a positive experience at Greenway. Kathie Retelle, owner of Savoir Faire wine shop, moved from Greenway to the Capitol Square in 2009. According to Retelle, she was recruited by Red Development to be a part of an upscale lifestyle center where big guns such as Crate & Barrel and Sharper Image would combine with interesting local boutiques. “They liked the idea of our edgy, quirky shop with a huge line of greeting cards that would fill the ‘Hallmark need’ without being a Hallmark,” Retelle wrote in an e-mail. “Our original artwork and rude/humorous novelty items were also something they were looking for, making an effort to break away from the average gifty-type shop.”
In turn, Retelle liked the idea of being in a Center with giant upscale retailers. For real shoppers, she figured the weather would not be a factor, ala Chicago’s Michigan Avenue, and she liked the advantage of having some parking right in front of the shops. Another planned service, she noted, was a train or trolley that would run up and down local streets to pick up and drop off office workers that wanted to shop on their lunch hours, which is the reason the Center has a train depot theme.
“None of that happened,” she stated. “They did not advertise on the Beltline or anywhere; the signage was very poor. Marketing was slow and even the locals hardly knew that the Center existed. By the time I moved in, which was nine months after the Center opened, the locals were disappointed in the management and the businesses already started the exodus.”
At that time, she indicated that the initial management team, which did not include Kautzky, was not helping local stores and was unyielding in its refusal to make helpful changes in their leases. “It would be fair to mention that some of the biggest corporate chain stores that were initially drawing crowds were having internal issues and fell victim to acquisitions, mergers, and bankruptcies. But the rent stayed the same and mall maintenance fees were very expensive.”
The final blow to Savoir Faire’s sales was not the fault of Greenway management. The store contained a wine bar and hosted parties and group events. According to Retelle, IRS agents discovered that the City of Middleton had issued her “a wrong liquor license,” which meant she could not serve wine or beer by the glass. The situation never got resolved, and it cost Savoir Faire about $8,000 per month. Retelle indicated that new management was much more understanding, but it was too late for rent breaks and other considerations to help.
Today, Center advertising is done outdoors on billboards and buses; each tenant contributes a certain amount, and RED matches it. Periodic events like the annual Art Faire bring traffic and, equally important, inform visitors about the Center’s emerging tenant mix. Castanget (We Me Market) has been in Greenway Station for four years, and his monthly sales are up between 30 and 40% over 2009. “The perception of negativity from two years ago can change into a positive perception when visitors come and say, ‘My gosh, these stores are new,'” he said.
Mike Davis, city administrator in Middleton, said the new Costco operation is bringing traffic to Greenway and other retail areas. In addition, a new Veterans Health Administration facility will have 372 employees, including 225 hired locally, in the former Full Compass site by next June. Davis believes the VHA will be well situated to provide additional retail customers for Greenway Station, Discovery Springs, and downtown Middleton. “It’s all poised to do really well once economy starts to improve,” he said.
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