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McKinley Mall moves on after losing two Macy’s stores

If anchor store closings have put neighborhood malls in a state of uncertainty, then put McKinley Mall down for a double whammy.

The mall lost two Macy’s stores in March – a traditional Macy’s department store and a Macy’s Home store – giving it twice the empty space to fill and twice the ambiguity.

But that ambiguity turned to opportunity two weeks ago when Benderson Development purchased both properties. There is enough additional land involved in the sale that Benderson’s redevelopment could transform the feel and makeup of the mall. Now customers are watching closely to see what’s in store for their vibrant, well-liked shopping center.

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PHOTO GALLERY: McKINLEY MALL

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McKinley Mall made its debut on Western New York’s retail scene in 1985. Protesters had fought its arrival – afraid it would turn the surrounding residential neighborhood into the commercial thoroughfare it eventually became. Just four years later, Walden Galleria opened, an 800-pound gorilla that would be credited with putting the Thruway, Como Park and Seneca Malls out of business.

The mall expanded in 1990 to accommodate a larger JC Penney store, and underwent construction again in 2005, 2006, 2008 and 2010 to add or reconfigure Best Buy, Barnes & Noble, Ulta, Old Navy and Bed and Bath & Beyond. Those stores were arranged in a line along McKinley Parkway, with direct access from the parking lot – an arrangement consumers have shown they prefer to traditional enclosed malls.

That configuration has been a big hit with shoppers, such as Kathy Rose from Derby. She said the layout is more like a shopping plaza, which is easier to get into and out of.

“It’s easy to shop. If I want only Old Navy I can enter their main doors,” said Rose.

The mall was trying to keep up with shoppers’ changing layout preferences when it made those changes, said mall manager Jeff Ohle. At the same time, it was trying to bet on the strongest retailers. Just before the major crash of 2008, it had opted for Bed, Bath & Beyond over Linens n’ Things; Barnes & Noble over Borders; Best Buy over Circuit City.

It chose wisely – each of the alternatives ended up bankrupt and defunct.

“That was strategic on our part,” Ohle said.

Like Boulevard Mall, McKinley Mall is well-kept, clean and updated. In 2005 its center court got a makeover, with soft seating, raised ceilings and added windows for more of a community meeting space vibe. Two years later, the food court got similar treatment, with skylights and Frank Lloyd Wright design details. Last year, its Dipson movie theater – an important feature that draws families to the mall – got new reclining seats with footrests and cup holders.

The mall has a lot of vacant space, but somehow, it doesn’t feel that way. At 968,000 square feet, 99,524 of it is unoccupied. That puts the mall’s occupancy rate at 89.72 percent – slightly worse than the Boulevard Mall’s 90 percent. But that comes into perspective when you consider the cavernous Macy’s department store takes up 88,000 square feet. Because the mall doesn’t own the Macy’s buildings, it no longer counts those stores and calculates its occupancy at a higher rate.

While Boulevard is beset by competition in a dense market – first against open-air plazas, then by Walden Galleria and Fashion Outlets of Niagara Falls – McKinley is more fortunate. There are shopping plazas to its western side, but they serve as a draw – particularly the Wegmans grocery store directly across the street. Heading south of Buffalo, there is not another mall until the Chautauqua Mall 75 miles away in Lakewood.

McKinley’s real competition comes from Quaker Crossing, two and a half miles away in Orchard Park. It has Target, Marshall’s, Famous Footwear, Dick’s and, more importantly, Justice and the Children’s Place. When Gap Kids closed at McKinley five years ago, it was the mall’s last children’s clothing store.

That dearth of kids’ clothing at the mall can lead customers to make the trek to Walden Galleria, even if they would prefer to stay at McKinley. Trina Heywood said she hates shopping the giant Galleria with its crowds and reputation for difficult parking, but will make the 20-minute drive when she has no other choice. Still, she likes the smaller, friendlier McKinley much better, which is just 10 minutes from her South Buffalo home.

“I love it. It usually has everything I’m looking for,” she said. “It’s more of a personal shopping experience.”

Heywood may be close by, but McKinley fans are far flung. The mall’s market area is far bigger, though mostly less populous, than any other regional mall in Buffalo Niagara. It draws from as far west as Fredonia and as far south as Olean.

It’s a strong property in a good location. Nearly 62,000 cars pass it every day. In the surrounding 10-mile radius, there are 536,000 people earning an average household income of $65,000 per year. The average household income in Boulevard’s market is $67,000.

Another indicator of the property’s strength is the activity on its outparcels. After FYE closed, it became Hobby Lobby. The former Rosa’s became L.A. Fitness. Circuit City became Savers. The relatively quick turnover cuts a stark contrast to some other Southtowns properties, such as the vacant Kmart that has languished in the middle of town for more than 10 years.

“Nothing has ever sat too long, let’s put it that way,” Ohle said.

Since March, the mall’s image has been hampered by the empty Macy’s stores, which closed as part of a national cost-cutting effort. That has left a chunk of the mall’s east end papered over and vacant. Someone approaching from that angle would be forgiven for believing the entire mall is closed.

Typically, Macy’s owns its own real estate. People were surprised when McKinley’s Philadelphia-based owner Stoltz didn’t attempt to buy either former Macy’s store. When the former Macy’s went up for sale at Eastern Hills Mall, management there jumped on the property, not wanting anyone else to get their hands on it.

“They can do whatever they want – lease it, sit on it, knock it down,” said Eastern Hills general manager Russ Fulton. “You lose control when another developer owns part of your property, that’s why we had no choice but to grab ours.”

Eastern Hills is redeveloping its former Macy’s as it looks to transform its mall into a lifestyle center with a higher-end mix of stores, restaurants, office space and a hotel.

But with dozens of malls across the country struggling to fill behemoth vacant anchors, off-loading the property to someone else may prove to be a smart move for McKinley. There are no other 90,000-square-foot anchor stores waiting to take Macy’s place, so the space would have to be redeveloped. And if the property is redeveloped now, it will be done with someone else’s millions.

That someone else is Benderson. It scooped up both stores for $2 million at the end of September. The developer already owns the Hobby Lobby building on the mall’s outparcel, and owns an eight-acre tract of land that butts up to the land under and around the Macy’s Home Store.

Still, the future of the properties remain two giant question marks.

Benderson officials have said they don’t know what they will do with the space. The company merely saw the properties come up for sale and jumped on the opportunity, said Eric Recoon, vice president of development and leasing. The proximity to both the mall and Benderson’s existing land next to the home store both were selling points.

“Clearly, like other malls nationally, McKinley has encountered some difficulties and struggles with department stores electing to close units, but we see that as an opportunity,” Recoon said.

Ohle said he hopes the new tenants would come from fashion or retail, something to fit with the mall’s current mix, but there’s no telling if that will be the case. It’s also not clear how the partnership would work with Benderson operating a business that would open up into the mall – though theoretically it wouldn’t be any different from Macy’s doing the same.

Recoon said the company is looking at options that include things other malls around the country have tried with their empty anchors: non-retail uses; demolishing the buildings to put up big box stores; parceling the existing building out into smaller uses.

Right now, “nothing is off the table,” he said.

“We are open to frankly a lot of logical options to backfill the space and we’re committed to considering all options,” Recoon said.

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McKinley Mall by the numbers

McKinley Mall: 3701 McKinley Parkway, Hamburg

Year built: Opened in 1985

Expansions: 1990, 2005, 2006, 2007, 2008, 2010

Size: 968,000 square feet

Occupancy rate: 89.72 percent

Population: 536,000 within a 10-mile radius

Average household income: $65,000

Major anchors: Barnes & Noble, Best Buy, The Bon-Ton, JC Penney, Old Navy, Sears, Ulta Beauty and Bed, Bath & Beyond.

Average daily vehicle traffic: 61,563

email: schristmann@buffnews.com

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