Planning for redevelopment at Turfland Mall

THE STATE OF RETAIL IN LEXINGTON | Part 1 of 3

ssloan@herald-leader.comOctober 26, 2009 

  • Around Harrodsburg Road

    What's empty? What's changing?

  • What neighbors say

    Tom Blankenship, who lives on nearby Mitchell Avenue: "It seems like (office space) would be sort of beneficial to the O'Charley's and the restaurants there. It might help their lunch business."

  • Garden Springs Shopping Center: Anchored by Big Lots, the shopping center has been more resilient than others during the recession since it includes stores "where economy-conscious people are going to go to shop in bulk and save money," said John Palumbo, chairman of Palumbo Properties.

  • What businesses say

    Cheri McMullin, who represents the owners of the former Springs Inn property and works for Parkway Developers, which manages nearby Lafayette Centre: "The whole area there needs to have a face lift and take a new feel, if you will. It would be exciting to see something new come in there."

    Lester Boyd, co-owner of Cat Fan-Attic, which recently moved from outside Turfland Mall to nearby Lafayette Centre: "It's going to be good for us. It's going to drive more people to shop in this area."

    John Palumbo, chairman of Palumbo Properties, which owns the nearby Garden Springs Shopping Center: "I would almost hesitate to pull a trigger on anything right now with the uncertainty of our times. With unemployment going up and people cutting back and scaling back, I can't imagine that being viable at least at this point. When unemployment starts going down ... then something might be viable."

  • Lafayette Centre: The plaza, which fronts Harrodsburg Road at the Lane Allen Road intersection, has a few vacancies but expects an international grocery to open before Thanksgiving, said Cheri McMullin of Parkway Developers. But as one store opens, another closes: the flower shop at the plaza shut last week. "The vacancies that we ended up with really had a lot to do with the economy and the type of business that was in there," McMullin said.

  • Turfland Mall: The mall itself closed last year, just months after its last major tenant, Dillard's, shut. Businesses with exterior entrances, such as Cici's Pizza and Staples, remain open. The proposed redevelopment plan would raze the enclosed mall (everything except Home Depot and the former Dillard's) and add space for primarily offices but also residential and some more retail.

  • What officials say

    Councilman Doug Martin, who represents the district that includes Turfland Mall: "Everyone would love something to be at Turfland Mall. Folks around there would love for it to remain a vibrant part of that neighborhood."

    Anthony Wright, Lexington's director of economic development: "We think it's encouraging to notice that even in these tough times we're getting these opportunities for redevelopment."

  • Gardenside Plaza: Among the largest stores in the plaza was the 15,000-square-foot Dawahares, which closed last year after the regional apparel chain filed for bankruptcy and shuttered its stores. Also in the plaza is another space about that size that once housed the chain's corporate offices. An Aaron's rent-to-own store will open in the former Dawahares retail space in early 2010, but the corporate office space remains available, said Frank Dawahare.

  • The Springs Inn: Owners Cynthia Mulvihill and her mother, Janet Jordan, closed the hotel in November 2008 shortly before they expected to sell the property. But the deal fell through, and they decided recently to tear down the property rather than maintain the buildings. The property has been taken off the market while the demolition proceeds.

Ending a long period of speculation, the owners of Turfland Mall, which closed last year but had been weak for years, hope to transform the site into a development that would be primarily commercial office space but also include residential and some retail space.

That is one of a number of changes coming to the areas surrounding the Harrodsburg Road corridor, where longtime landmark The Springs Inn is being demolished and sold for redevelopment.

The proposed concept for what would be named Turfland Town Center would call for the razing of the area that was the enclosed part of Turfland Mall — Lexington's first — between Home Depot and the former Dillard's space.

It would be the first major change for the mall since Rubloff Development Group bought the property in the late 1990s. After Rubloff purchased the mall, it began an extensive renovation, but as the years passed, the mall's tenants pulled out, eventually leading to its current nearly empty state.

"The reality is, many major markets ... can only absorb one regional mall, and Fayette Mall is doing more than enough to do that. Just the sales volume out of there is tremendous," said Zach Knutson, chief operating officer at the Rockford, Ill.-based Rubloff, in explaining why the proposed redevelopment will be a new design.

He said the plan is contingent on finding a major anchor tenant to fill the former spot of Dillard's, the closing of which in early 2008 signaled the beginning of the end of the mall. If a tenant is signed, that space would be remodeled extensively to fit the overall design of Turfland Town Center. No plan has been submitted to city planning officials yet.

"That's why I can't say it's any more than conceptual at this point," Knutson said. "While we're in talks with several tenants, they aren't secured."

Knutson said the anchor space could be something other than just a retailer. The site, he said, is aiming to be primarily commercial offices that need large footprints.

"It's very hard in today's retail world, where retailers are very cognizant of cannibalization of their own stores," he said. "With the economy the way it is, many are not willing to take the risk to build or lease and have their sales cannibalized at another store."

Depending on who signs on, the redevelopment could happen "in as soon as nine to 12 months from signing," Knutson said.

Rubloff is also still exploring whether the proposed residential areas would be condominiums or apartments.

"We are waiting to see how the condo market reacts when the economy picks up," Knutson said.

Turfland Mall continues to have some tenants, including a Staples office-supply store and the Dink's Cafe video-gaming center, who have storefronts on the mall's exterior. Home Depot owns its property and would be unaffected by the plans.

"For those that have leases that are in force into the future, we will make plans to accommodate them," Knutson said. He declined to specify lease dates for any of the tenants but said "we look forward to Staples being a part of our redevelopment efforts."

Will it work?

The plan calls for the site to be primarily office space, but more of that space is available around the city as the recession has worn on.

A mid-year report by NAI Isaac showed that 13.3 percent of suburban office space in Lexington is available.

"Employment will need to improve for the office market to gain more momentum," the report concluded. It also noted that no mid-size to large suburban projects were proposed for 2009.

"Things are very hard to accomplish, and there's a lot of competition," said Tim Haymaker, owner of Haymaker Development Co., which developed Beaumont. "You can't make any money in the new buildings right now."

Jeff Stidham of Stidham Commercial Partners, which is serving as an office space broker for Rubloff, said many communities around the country "would love to have that low a vacancy rate."

He said Lexington's vacancy rate has been skewed by the prevalence of small office condos.

Turfland Town Center is aiming for companies that need large footprints, "and in Lexington, you can find very, very little of that kind of space," Stidham said.

The feasibility of the project might become closely watched because Rubloff is researching whether to ask the city and state to help pay for public infrastructure improvements on the site using what is called tax-increment financing.

Knutson said the group is exploring it because of the "large public infrastructure cost" that would come with some of the plans, which include building a parking garage and making utility improvements.

The idea behind TIF projects is for governments to invest in improving infrastructure and then pay for those improvements using new tax revenue, which developments are expected to generate when the projects are completed and areas are revitalized.

The city has supported TIF financing to improve infrastructure around the proposed CentrePointe development downtown as well as for the Distillery District project along Manchester Street. The state, which has to sign off on proposals, has approved the plans near CentrePointe and is finalizing its work on the Distillery District request.

Clamoring for a revival

The possibility of redeveloping the vacant mall drew praise from city officials.

"It would be great for the Gardenside area," said that district's councilman, Doug Martin, who grew up near Turfland Mall and recalled the many summer days he spent there.

"My mother used to plop us down in front of the TVs at Montgomery Ward while she shopped at McAlpin's," he said. "Area malls like Turfland Mall and Lexington Mall are in many ways a lifeblood of communities. When they go dark, it takes some of the wind out of neighborhoods."

A redeveloped Turfland Mall might also make selling the soon-to-be-cleared Springs Inn property across the street easier.

"We've looking at trying to get something similar but at this point don't know what's going to come in," said Cheri McMullin, who worked at the Springs for 15 years and represents the owners. The property has been taken off the market while the demolition continues.

"It would be exciting to see something new come in there," she said. "The mall, similar to the hotel, had its day, and things are just changing."

Knutson said the site has loads of potential.

"It's still in the urban service district of Lexington, and that creates less competition for a project of this magnitude," he said. "We feel we can definitely make something happen."

And the demolition of the Springs shows "that area is ready for development," he said. "It's not just a pipe dream."

Rubloff's history

The redevelopment plans are by no means Rubloff's first work in Kentucky. It's working to develop the Paddocks of Woodford in Versailles but has encountered several delays. Winn-Dixie planned to anchor that site but filed for bankruptcy and pulled out. The company then signed Lowe's, but the recession hit and the home improvement retailer pulled out.

The company has seen success, though, with its redevelopment of the former Bashford Manor Mall in Louisville.

At Bashford Manor, the company transformed the aging mall, which had seen Dillard's pull out, into a retail complex anchored by a free-standing Target, which had been previously attached to the mall.

It also added Lowe's, Wal-Mart, and most recently, a Burlington Coat Factory.

"That project is about 95 percent developed," Knutson said.

The redevelopment of an existing mall as a mixed-use development, though, will be the first for Rubloff. Knutson said the company is in the process of creating new developments that way but has traditionally redeveloped with single uses in mind, such as retail at Bashford Manor.

"We are firm believers in the Lexington market," he said, "and we don't like to see a vacant mall as much as anyone else."

And neither do the people who live and work along the corridor who have seen retail concentrate further down Harrodsburg Road at Palomar Centre and Beaumont Centre.

"I think those made an impact to some degree," McMullin said. "And Hamburg had an impact because there were people from Eastern Kentucky who once drove into Lexington but now they make it to Hamburg and stop."

But even the possibility of redevelopment has brought back hope for Harrodsburg Road.

"It's one of those major thoroughfares of Lexington," McMullin said, "and I really do believe it's going to come back and be an awesome part of town again."

Reach Scott Sloan at (859) 231-1447 or 1-800-950-6397, Ext. 1447.

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