In recent years, Starwood Retail Partners has poured $125 million into repurposing its Shops at Willow Bend property with a slew of new non-traditional tenants, from a children’s entertainment venue to a luxury fitness building and a new restaurant district. Mall spokesperson Amy Medford said the mall will continue to move forward with the unfinished portions of the plan, which include an office tower and possible residential concepts.
“Starwood has completed over $125 [million] in improvements over the last three years, including the new Equinox, Crayola, restaurant district and Cinepolis that will open this summer,” Medford said in a statement. “We’re delighted at the excitement and interest this investment has generated and are in advanced planning stages to add [complementary] uses to the center, including multifamily and office.”
As of a few weeks ago, the mall was two months late on its payment on the loan that financed the project, and the further departures of several mid-size tenants not tied to the renovation project have left behind empty spaces that remain unfilled.
The mall’s owner, Starwood Retail Partners, said in late January that the company is working to extend and restructure its loan.
The mall declined to comment further on the project or its financing.Plano resident and former Chamber of Commerce board President Craig Perry was the mall’s first general manager, holding the role from before the mall opened in 2001 until 2002. Perry said it can be difficult to draw conclusions about a project’s status from a late loan payment alone.
“It’s not uncommon for developers to be late on loans, and generally what it means is they’re just looking at refinancing,” Perry said. “I’m not too concerned about that at all.”
The new and the old
Like most major shopping centers, The Shops at Willow Bend has taken a hit in recent years as fewer shoppers are buying from traditional department stores and retailers.
However, there are some signs that the early parts of the redevelopment project have started to pay off.
The Shops at Willow Bend’s revenue dipped in 2017 during a year of intensive construction before rising again by 2.6% the following year when some of the new tenants opened, according to a loan report from commercial real estate analytics firm Trepp LLC.
The North Texas Performing Arts theater group opened a new facility at the mall in 2017 with space for its academy program, performances and offices. Last year, this facility alone brought more than 200,000 people through the doors of the mall, NTPA CEO Darrell Rodenbaugh said.
“We also make the space available for community and civic events,” Rodenbaugh said. “Our hope was that this would be a facility for the whole Plano community, and we could not be happier with how it has fulfilled that vision.”
The mall declined to provide an estimate of how much foot traffic these new tenants have brought into the mall.
The opening of the North Texas Performing Arts facility in late 2017 was followed by that of the 60,000-square-foot Crayola Experience children’s entertainment location, which opened in April 2018. The first eateries at the mall’s new restaurant district opened a few months later. The restaurants serve as a new front entrance to the mall, facing the Dallas North Tollway.
As one walks through these entrance doors, past the Mexican Bar Co. on the left and Knife Steakhouse on the right, some of the mall’s more prominent departures soon come into view.
The space formerly occupied by the Apple Store, which closed in April, still lies vacant. Apple announced the closure in tandem with the closure of a Frisco store at Stonebriar Centre.
Down the hall, darkened windows are all that remain of the former Forever 21 store. The 38,000-square-foot outlet closed Dec. 30 after the fashion retailer filed for bankruptcy.
The mall declined to comment on plans for the vacancies.
Twelve percent of the mall’s leases will expire within one year, according to the January loan report. More than half of the mall’s leases are set to be active for more than four years, the loan report says.
The mall’s longest-term leases are with its three main department stores: Macy’s, Dillard’s and Neiman Marcus. Each of these leases is set to expire in 2099, according to the loan report.
An industry disrupted
Large shopping centers have increasingly turned to nontraditional tenants in recent years to draw new foot traffic.
Malls in the Dallas-Fort Worth area saw occupancy rates climb from just under 89% at the end of 2018 to nearly 91% by the end of December, according to a report from Weitzman, a Texas-based real estate group. This rise was partly fueled by new anchor leases, none of which were traditional department stores, the report said.
Instead, the new anchors have looked more like the nontraditional offerings at Willow Bend, Weitzman spokesperson Ian Pierce said. Willow Bend’s addition of Equinox Fitness was just one of the transactions made last year in DFW-area malls to follow this trend. Others of the sort included the openings of Kidzania at Stonebriar Centre in Frisco, Conn’s and Fitness Connection at Denton’s Golden Triangle Mall and a newly announced UT Southwestern Medical Center at Redbird mall in Dallas.
“The disruption of the department store category means malls today fill vacancies with a new generation of anchors, like fitness, medical, grocery, entertainment and the like,” per the Weitzman report. “[Malls] welcome these concepts because they drive traffic during the week.”
Overall, most retail centers were relatively conservative in pursuing new construction in 2019, according to the Weitzman report.
“Conservative construction helps [malls] avoid the overbuilding that marked previous periods of strong retail market performance,” the report said.These reduced construction levels are not just a recent trend. Retail properties in the Dallas-Fort Worth area added half as much new space in the last decade as they did from 2000-09, when roughly 47 million square feet of retail space was built.
Perry, the former Willow Bend mall general manager, said he feels attached to the mall, having played a role in opening it and watching it become the last mall standing in Plano.
“It’ll always be my baby,” Perry said. “It’s interesting. When they went through the renovation, Starwood, I was a little upset because there was some great elements—classic craftsman style that I really, really enjoyed. And yet, if I take myself out of going through the opening, and if I went into it without that background, I think it looks beautiful.”
That said, Perry acknowledged the mall has had to evolve from what it was originally conceived to be. In the early days, Perry said, the mall was home to exclusive, high-end retailers that nearby residents appeared unable to consistently support.
As The Shops at Willow Bend continues to pivot to a more diverse tenant base, its path forward will involve a re-examination of the financing behind the project, Starwood Senior Vice President Dan Scorpio said.
“In the meantime, it is business as usual at the property as we continue to work hard executing our repositioning plans,” Scorpio said.