As empty storefronts increase, is the Country Club Plaza losing its appeal? – Kansas City Business Journal – Kansas City Business Journal

About two dozen empty storefronts line the Country Club Plaza.
Recent losses include such big-name brands as Michael Kors, Kate Spade and Brighton Collectibles. Local home décor and furnishings retailer RE: is about to go dark, leaving behind a 21,274-square-foot space at 4704 Wyandotte St. The former t.Loft space, which sits on a prime corner spot, hasn’t been filled since the local eatery opted to not renew its lease in 2020 because of business challenges.
“As an owner, I’ve never been more worried about the Plaza,” Drake Development LLC President Matt Pennington said. “You see all the big names going away. It’s going to have a domino effect because big names draw in big names. Additional people will fall out. … I’m passionate about this. I’m living it. I’m breathing it every day, and it’s tough to watch.”
Pennington is part of JH Investors LLC, a group that’s redeveloping the 62,600-square-foot Jack Henry Building at 612 W. 47th St. In addition to fitness anchor tenant Chiefs Fit, the group plans to fill the space with restaurants, retail and an entertainment-style tenant similar to Punch Bowl Social. (Punch Bowl Social was to occupy 21,000 square feet in the building before filing for Chapter 11 bankruptcy in late 2020.) Pennington expects every tenant will be up and running by the first quarter of 2023.
Some of the big-name closings — Michael Kors, Kate Spade and Brighton Collectibles — were expected, said Bill Taubman, COO of Taubman Centers, which co-owns the 15-block shopping center district with The Macerich Co. The three retailers adopted a new strategy that reduces the number of full-priced stores and instead focuses on their discounted, outlet presences, he said.
“We’ve had them closing in a number of different projects, so this is not unique,” Taubman said.
Taubman Centers also planned on the January closing of Victoria’s Secret and Pink, which were part of a long-term sublease in a building with low rents. When Taubman Centers became a Plaza owner, it outlined a plan to eventually re-lease the space.
David Block, who has an office on the Plaza, said he’s not concerned about the empty storefronts. The president of Block & Co. Inc. Realtors, a real estate brokerage with extensive retail-market experience, cited Covid-19 challenges and the fact that more retailers are whittling their brick-and-mortar footprints as they’ve honed their e-commerce presence. It’s happening nationwide, not just on the Plaza, he said. But as those retailers shrink, plenty of new and midsize retailers with solid sales are ready to expand.
“There’s a huge amount of people out there that still want to go out,” Block said. “They want immediate gratification. … They want to kick the tires, as we say, and then take it home with them.”
As the Plaza works to find the right mix to fill empty spaces, a number of current tenants are concerned, RE: co-owner Chrysy Huff said. Some have told Block that it’s affecting their sales volumes.
Although Made in Kansas City partner Tyler Enders said he’s optimistic about the Plaza’s future, having too many seasonal tenants at one time could create the wrong impression when they leave.
“If you keep walking by empty storefronts to go from one store that you love to the next store that you love, or to the next restaurant, you kind of get this sense that the area is in decline,” Enders said. “The same goes for when you see a lot of local tenants come in and you see someone who comes in seasonally, and then they’re gone the next season. It creates a little bit of confusion. It also casts local retail in a bad light sometimes because a customer might think that local retailers aren’t sophisticated enough to operate at a high enough level to stay in business. I think there needs to be a balance. You can’t have too many temporary deals at a time because then it creates this sense that local retailers don’t have what it takes.”
Timely building maintenance is another common tenant concern, said Huff, who cited the issue in her letter to the Plaza about leaving. With RE:’s space, “it’s not a short list” of things that need attention.
“A couple of weeks ago, I finally got a response about a couple of things, but there’s still ongoing things that have not been working for a long time,” she said.
The Plaza is challenged with older buildings, and Taubman Centers and Macerich inherited deferred maintenance when they took over, Taubman said. Although they’ve tackled some of it, there’s more to do, he said.
“There are always going to be issues in older buildings. … There’s no question that there’s always a maintenance opportunity,” he said. “You can always do better, and there’s always a certain amount of money that you want to spend in a given year.”
Made in KC opened its Plaza store in 2018. It expanded into adjoining space in September, bringing the total to just less than 11,000 square feet. The expansion allowed the retailer to feature more local artists, makers and food artisans.
It’s the company’s largest store — and busiest, partner Keith Bradley said.
“Even despite the challenges of the last two years navigating the pandemic, we have actually exceeded our expectations,” Bradley said.
During the 2020 and 2021 holiday seasons, sales eclipsed previous years on the Plaza.
“The Plaza store is an important part of our business,” he said. “It has created amazing growth opportunities for us as a company, and in many ways, it has become our most visible store.”
Emily Bordner, founder of local accessories retailer EB and Co., expanded to the Plaza in March 2021.
“I never dreamed of having my own store on the Plaza,” Bordner said. “Growing up in Kansas City, it’s just kind of this gem of a shopping district, and I never even let my mind go there. It was so unreachable.”
The pandemic’s retail challenges, however, gave Bordner stronger negotiating power and helped her secure a more favorable lease.
“It’s been amazing, and it’s totally exceeded our expectations,” she said. “I think people want to see something that’s unique because it’s such a touristy area. People love finding local products, lines and brands. It speaks to why Made in KC is so successful, as well.”
EB and Co. also celebrated a record 2021 holiday season, and the Plaza store played a big role, she said.
“I think it’s going to be hopefully — fingers crossed — our best year yet because I think there’s going to be so many fresh new businesses down there and a lot of fun new concepts,” Bordner said.
Like Taubman Center’s other properties, the Plaza has started to rebound from the pandemic. Last year’s sales exceeded 2019, Taubman said.
“I don’t think it’s lost its appeal, I just think it’s going through environmental growing pains,” Block said. “People still want to come to the Plaza — they just need a reason.”
The Plaza needs to adapt to the marketplace and customers, and it needs some fresh and exclusive tenants, he said. As the sports and convention businesses pick back up, out-of-towners will be looking for tenants they can’t find at home.
Developer Pennington was drawn to the uniqueness of the Plaza, which is nearly 100 years old. For many visitors, it’s the face of Kansas City.
Although the Plaza has built a reputation for landing new-to-market retailers and restaurants, that has started to fade, he said.
“We’re stuck in a vision that worked unbelievably well for 40 years,” Pennington said. “But doing the same thing over and over again is insanity … and that’s the mindset today. That mindset is slowly killing the Plaza.”
In today’s retail environment, the Plaza is shackled with too many retail spaces. It needs a new vision and the ability to add more residential living to drive activity and attract relevant tenants, he said. Height restrictions, the amount of parking and the Plaza’s density should be re-evaluated against current and future needs.
“You’re going to continue to see a decline in the Plaza until that is figured out,” he said.
One of the most anticipated new tenants is Nordstrom, which has said it will relocate from Oak Park Mall in Overland Park to the Plaza at 4720 Jefferson St. Construction started in 2019, and Nordstrom originally planned to open the 122,000-square-foot store in 2021. The timeline has since been pushed back to the fall of 2023. According to Taubman, Nordstrom remains on track to open.
Taubman Centers and Macerich are focused on finding distinctive, relevant tenants, including some that are unique to the market, Taubman said. They also want to attract brands that complement some of the Plaza’s higher-end tenants.
“It’s my job to worry about, ‘Are we bringing in unique merchants, and are we continuing to enhance the quality of the Plaza?'” he said. “That’s always a work in progress, particularly when you’re in a retail environment like we’ve been in. … But, without a doubt, it still has this unique appeal.”
The Made in KC partners and Bordner hope the Plaza keeps local, long-term tenants on its radar. Taubman said “there’s absolutely a place for local tenants,” though it must be balanced with the larger, well-known brands.
Enders, who sits on the Kansas City Planning Commission, said the Plaza doesn’t need more banks or service-oriented businesses like dentist offices taking up prime first-floor spots.
If the Plaza doesn’t shift its vision, Pennington worries it will be tougher for developers like him to retain and attract all-star tenants.
“If you talk to a lot of the locals, a lot of people would say, ‘Yes, it’s losing its luster,’ but no one wants to be proactive in trying to fix it. My group is doing just that. We’re doing everything we can to revive it with anchors that we believe are long term and sustainable,” he said. “At the end of the day, you don’t want to lose the luster of the Plaza, and that’s the one thing I think all of us can agree on.”
New Plaza tenants that opened within the past year:
Plaza tenants slated to open in the near future:
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