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Monday, Nov. 09, 2009

Lexington Mall at the mercy of out-of-town owners

THE STATE OF RETAIL IN LEXINGTON | Part 3 of 3

Ever since its slow death finally came in 2005 with the exodus of Dillard's, Lexington Mall has sat. And sat. And sat.

It has become something of a riddle. Area developers look at the nearly vacant, 30-acre site and salivate at the location, an easily accessible corner of Lexington's busy Richmond and New Circle roads.

But besides the Applebee's and Perkins restaurants, nothing but the empty former mall sits on the land owned by Saul Centers of Bethesda, Md.

The company has been demonized by some who loathe the out-of-town owners who promised but failed to invest in remodeling the mall during its final decade, sued tenants who fled and became entangled in a long court fight with The Home Depot, which bought and developed adjacent property.

"Saul is the epitome of the bad out-of-town developer who just doesn't care," said Mike Scanlon, chief executive of Thomas & King, the restaurant company that leases land from Saul for its Applebee's restaurant. "There are great out-of-town developers in Lexington who do care. Saul's just not one of them."

The city government has maintained contact with the developer and has been told Saul is looking perhaps to add some restaurants near the Richmond Road edge of the property.

Vice Mayor Jim Gray also plans to push for the city to hire a retail consultant to craft a strategy to deal with that property and others around Lexington.

Multiple phone messages left for three Saul employees went unreturned. The leasing agent for the property hung up when a Herald-Leader reporter identified himself, and he then failed to return follow-up calls.

Years of promises

Saul has owned the property since 1974, the year before the mall opened, according to records on its Web site.

The mall thrived for decades with high occupancy rates. As the only shopping mall on the Richmond Road corridor, it competed well with Lexington's other two malls, Fayette and Turfland.

But the mall began to lose ground in the 1990s with Fayette's expansion. At the time, Saul's executives and managers promised changes.

"There are plans to do some major stuff," Chris Netter, vice president of leasing and development, told the Herald-Leader in 1990.

Three years later, the leasing agent said the mall would be remodeled. And as the years passed, more remodeling talk was heard and a second floor was discussed.

The changes never came, but lawsuits did. In 1997, Saul sued The Home Depot, which built a freestanding store on neighboring property. Saul said the home-improvement retailer violated a 1969 agreement between the owners of the two pieces of property that specified the land should be developed as one "mall-type shopping center."

By 2005, the mall was empty, as retailers headed to Hamburg and elsewhere. Saul sued several, including at least five in 2001, saying they violated their leases.

Throughout the years, the company has stayed quiet, rarely speaking with the media, and it has gained a reputation of being tough to deal with even for its tenants.

"I've been dealing with Saul for 10 years, and I've never dealt with a more difficult company," Scanlon said. "Unlike other developers in Lexington, these guys don't have a heart for the city they're in."

Since the fourth quarter of 2007, Saul officials have told investors in materials available on the company's Web site, www.saulcenters.com, that it has "prepared conceptual designs for a shopping center development and is marketing the site to prospective retailers."

Joe Kelly, senior adviser for management to Lexington Mayor Jim Newberry, said he has kept in touch with Netter, the Saul executive, generally every six to eight weeks since January 2007.

Saul has told the city it is formulating redevelopment plans and intends to reconfigure the pond in front of the Richmond Road entrance as part of that. It is in need of a federal permit, and the city has signed off on the application as required.

The city had initially withheld support, according to documents, because officials were concerned that Saul would immediately fill the pond. The company said that's not its intention and it would not seek any permits related to that until a development plan is filed.