Business

Without Lucky's, can Iowa City Marketplace turn the corner?

Lucky’s Market at Iowa City Marketplace, formerly Sycamore Mall, in Iowa City, Iowa, on Monday, Aug. 26, 2019. (Jim Slosiarek/The Gazette)
Lucky’s Market at Iowa City Marketplace, formerly Sycamore Mall, in Iowa City, Iowa, on Monday, Aug. 26, 2019. (Jim Slosiarek/The Gazette)
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IOWA CITY — Even without Lucky’s Market, Iowa City Marketplace still has life, its supporters say.

Stakeholders championed the natural food grocer as a key anchor tenant before it opened in June 2015, projecting it would both buoy existing mall tenants and attract new ones. But the Boulder, Colo.-based business wasn’t long for that location, and it shut down operations there in early March, bringing its number of Iowa stores back to zero.

Barren grocery shelves, crates and shopping carts could be seen in the former 34,000-square-foot Lucky’s Market this past Wednesday morning. The parking lot outside reflected the vacancy, with modest activity at the mall’s stores on either end.

When it debuted in 1969, the then-named Mall Shopping Center was the first enclosed mall in Iowa, and came with anchor tenants Sears, Von Maur department store and Walgreens.

Over the past few years, its business makeup has been somewhat fluid. While it has successfully attracted tenants such as Planet Fitness in 2014 and Joann Fabrics and Crafts in 2018, others have slipped away.

In 2013, Von Maur department store departed the mall for the Iowa River Landing development, after the city of Coralville dangled a carrot — more than $9.5 million in tax increment financing.

The most recent tenant to leave was TITLE Boxing Club, which last week moved to Coralville under its new merger with Thrive Gym, which is located there.

A tiff with TIF

Provisions of Iowa City Marketplace’s tax increment financing agreement with Iowa City tie the mall’s financial well-being even more directly to its occupancies and vacancies, compared to its nearby counterparts.

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To continue receiving annual $250,000 payments under the seven-year, $1.75 million TIF deal City Council members approved in November 2014, the mall must maintain an 80 percent occupancy rate.

City documents show the mall has fallen short of that requirement in 2017 and 2018, during two of the three certifications it has submitted each November since the agreement went into effect, forfeiting $500,000 in TIF rebates to date.

Iowa City issues the rebates on a two-year staggered basis, meaning the next time the mall could receive $250,000 is in June 2021. To be eligible for that payment, the mall must reach 80 percent occupancy by this November, said City Manager Geoff Fruin. He clarified that any new tenants would need to be active, rather than just having signed a lease, to count toward the threshold.

Fruin said he expects that, “It’s going to take a bit of time for Lucky’s and the mall owner to fill that space, but we’re confident that they will and we feel the mall will continue to be a strong asset for the community.”

Iowa City Marketplace already has satisfied its other obligations under the TIF agreement, he said, including that it improve its 21-acre property’s assessed value by 15 percent and invest a minimum $4.4 million into on-site renovation, he said.

Through July 2018, the mall invested $5.47 million into improvements such as interior remodeling, facade improvements, landscaping and parking lot upgrades. The 21-acre property’s assessed value rose from $10 million in 2014 to a current $12.4 million, or a 24 percent jump.

There was precedent for Iowa City in supporting Iowa City Marketplace — or, as it was known up until a 2013 rebrand, Sycamore Mall.

City Council members in 2000 approved a seven-year, $1.8 million TIF agreement, funding exterior upgrades and requiring the mall to raise its assessed value by at least 15 percent.

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Following the deal, Marcus Sycamore Cinema grew from two to six movie screens, Panera Bread opened its mall location in 2001 and the center’s value grew from $4.7 million in 2000 to $10.2 million in 2002.

Past, present and future

Current owner CORE Sycamore Town Center, an affiliate of California-based CORE Realty, bought the mall property for $18.6 million in 2008.

The mall’s assessed value reached an apex of $16.4 million in 2010 and fell to $11.3 million two years later in 2012, when it announced Von Maur’s plans to relocate to Coralville.

Iowa City Marketplace briefly went into foreclosure in October 2012, owing Wells Fargo $12 million on a $13 million loan, though by March 2013 it had secured new financing from Great Western Bank.

Over time, said John Arlotti, a consultant for CORE Realty, he and other representatives have aimed to make a shift from a more traditional mall to what he calls a “power center,” with connectivity for customers between the businesses and the parking lot.

Arlotti said the mall is at slightly more than 70 percent occupancy, with 22 tenants, and that there have been talks with multiple different retail candidates to fill the 37,000-square-foot former Lucky’s Market.

Though nothing has been finalized yet, he said, “Right now, everything is on the table.”

Though Lucky’s Market ceased operations at the mall, Arlotti said the business still is leasing its former location and working with CORE Realty to find a new tenant.

“It’s a very interesting situation because for us. It’s leased, but for the city, it’s not occupied” under the TIF agreement provisions, he said.

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Arlotti said it is “a little nebulous” whether a new tenant will move in by the city’s November deadline for the next TIF payment, noting that, to bring in larger tenants, more work is required in figuring out any improvements or architecture needs.

Elsewhere in the mall, independent of the former Lucky’s, Arlotti said CORE Realty is in negotiations with businesses to fill about 34,000 vacant square feet of space, at the 200,000-square-foot mall, and hopes to make announcements within the next 45 to 60 days.

A leasing brochure from Buyers Realty, last updated in early May, listed 56,847 square feet available for five tenants, plus two sections of mall where future construction could take place.

Arlotti highlighted Iowa City Marketplace’s new addition of the Mexico Lindo Grill and Cantina restaurant and a five-year extension of Petland’s lease as recent signs that mall business is strong.

“I think the most optimistic point we have is that the tenants are doing well, and I don’t think the fact that Lucky’s left is a reflection that business is not doing well there,” Arlotti said. “Lucky’s didn’t do well, but that’s in my belief their issue, not the shopping center’s issue.”

Lucky’s Market did not return requests for comment from The Gazette. A spokeswoman told the Iowa City Press-Citizen in February that the store “just didn’t thrive like we hoped for” at its mall location.

Though the store thought Iowa City was a “good fit,” she said its location was on the other side of town from the University of Iowa, “where there’s more action.”

Katie Andrios, president of Four Seasons clothing store, said the departure of Lucky’s Market neither helped nor hurt operations at her Iowa City Marketplace store, where she said business is doing “very well.”

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“We focus on our business as a stand-alone basis and don’t rely on our neighbors to draw traffic to our store,” she said. “While we like having neighbors and we want them to do well, it’s not as important to our success as our own decisions are.”

Four Seasons has been located in four spots at the mall over more than 10 years there, and from its current location, Andrios said, “If you look around, there’s not a lot of other retail spots available.”

“I do feel like the Iowa City Marketplace has an opportunity to grow, and I feel strongly that the mall ownership seems to be open to finding the things that work,” she said. “They haven’t given up, and I’m happy there.”

Arlotti also expressed optimism about the mall’s future, citing what he described as a “great amount of community support.”

“What’s interesting is, so many people went there with their grandparents,” he said. “From an Iowa City perspective, everyone is very diligent about being optimistic and keeping the center up and going.”

Comments: (319) 398-8366; thomas.friestad@thegazette.com

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