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Transformations of Lakeside, Oakland malls come into focus

Posted By: The Detroit News on June 26, 2023.  For more information, please click here to read the source article.

During the fall, the owners of Lakeside Mall signed a deal with the city of Sterling Heights that would pave the way for the redevelopment of the 110-acre site into a mixed-use complex. Tenants at the mall are still wondering what’s in store for them during and after the transition.

“Things happen in life,” said Alex Habre, owner of Sparkles Jewelry. “I’m a very optimistic person, but the issue is the uncertainty for me.”

Lakeside Mall is among Metro Detroit malls undergoing transition amid a changing retail landscape, turbocharged by the enduring appeal of online shopping. Two others in Metro Detroit, Oakland Mall in Troy and Fairlane Town Center in Dearborn, are under new ownership.

Lakeside’s owner, Lionheart Capital, last fall said demolition could begin as early as the end of 2024, although the company has not provided a recent update on the timeline and plan that envisions incorporating some retail options amid planned multi-housing units and a city park. Meantime, Lakeside continues to operate, and the businesses want people to know they are still open.

“We are selling mostly right now — not the jewelry — we’re selling the story that the mall is going to be still for another year, year and a half,” Habre said. “We’re going to be relocating. We’re a family business. We’re going to be in business for some time.”

Lakeside Mall has said it plans to repurpose itself as mixed-use, demolishing most of the shopping center in favor of largely residential development. Oakland Mall plans to diversify its offerings, adding more dining and experience options to the mix. Multi-family residential development could be in the future for the mall’s underutilized parking lots.

This all comes at a time when malls nationally have seen some post-pandemic recovery, according to Coresight Research. Traffic at top-tier malls rose an average of 12% in 2022 compared to 2019, according to the firm, and traffic at non-top-tier malls was up 10%.

The country arguably is over-malled, said Robert Mihelich, a retail property expert at JLL Inc.: “There’s been de-malling that has happened over the years that’s been successful. Whereby they either have taken out the larger anchor and put in some smaller-box users, then turn it into more of a larger power center with outlots. That seems to be a trend that’s worked.

“Some of the other cases whereby they don’t feel that the shopping is going sustain anymore,” he added, “they’ll actually take the mall down and now repurpose the property for alternate uses, i.e., residential and/or even as far as turning it over to home headquarters for larger corporations.”

A long-term horizon

In November, the Sterling Heights City Council approved a memorandum of understanding with Lakeside OOTB Ventures LLC, an affiliate of mall owner Lionheart Capital, for a development expected to include residences, dining, retail, parks, a hotel and office space.

The plan for the Lakeside City Center is expected to bring more than 2,800 multi-family apartments, including 750 senior housing units. The development would include nearly 150,000 square feet of retail and dining, 60,000 square feet of office space, a 120-room hotel and a park. Macy’s and JCPenney are expected to remain on-site during and after construction.

At the time of the agreement, business operators, including Habre from Sparkles Jewelry, expressed the desire to be included in future retail plans at the site.

When contacted by The Detroit News, Lionheart Capital did not provide an update on its plan or timeline. Luke Bonner, senior economic development adviser for Sterling Heights, said Lionheart Capital has not yet submitted an official plan for the site.

This month, Sterling Heights City Council approved a resolution of intent to create a Lakeside Corridor Improvement Authority that would use bonds to help fund infrastructure improvements to a district surrounding and including the mall site. The council is expected to vote in August to formally adopt the improvement authority and its boundaries.

It could take several years for the redevelopment of Lakeside to come to fruition as the mall owners work through the ownership of various parcels and any restrictions on the site, Mihelich said.

“A project as big as they’re undertaking and looking at doing, I don’t see it happening personally for at least 12 to 24 months … ,” he said. “When we develop freestanding shopping centers or strip centers today, it’s a two-year build process. So something of this magnitude is going to take all of three to four years to five years to complete or really get off the ground.”

The mall owners could call in other developers to undertake projects on the site such as multifamily housing, senior living sites or medical facilities, Mihelich added: “They could bifurcate and spin it out to other developers and let them move ahead with it. I see some of that happening. That would probably help them launch quicker and faster.”

Changes at Oakland Mall

At Oakland Mall in Troy, new owner Mario Kiezi has been vocal about his plans to transform the mall. Kiezi, who purchased the mall in early 2022, has said he wants to add more dining and experience options.

Kiezi wanted to take the first year to learn about the property and engage the community. On social media, he frequently posts feedback from his viewers as well as accounts of his visits and interactions with customers at the mall.

The biggest launch for the mall so far is Choco Town, an immersive chocolate sensory experience. The limited attraction launched in March and was extended through mid-July due to demand. The attraction “has gone over very, very well,” Kiezi said. “I call it a case study for future entertainment to come.”

Hobby Lobby opened at the mall in January and several new eateries are planned, Kiezi said, including an Asian-inspired fluffy pancake restaurant and a second location for Seaviche Tacos and Bowls. Detroit 75 Kitchen plans to open a bricks-and-mortar location in the former Sears Auto Center.

Kiezi hopes to announce this year an electronics store that would open in 2025. There’s also potential for residential housing and a park on land surrounding the mall along John R and Interstate 75.

“I believe you’ll see a major change in DNA in late 2025,” he said. Occupancy at the mall is between 80% and 85%, and about 4.3 million people visited in 2022.

Oakland Mall has historically been a survivor, said Russ Long, partner and managing director with Bloomfield Hills-based financial and strategic advisory firm O’Keefe LLC: “Restaurants and experiences will allow Oakland Mall to continue to survive for the time being, but the pressures of online shopping will continue to plague all but the best shopping malls in the U.S.”

Chris Chong, owner of KC Jewelry at Oakland Mall, is taking a wait-and-see approach regarding changes at the shopping center. A tenant in the mall since 2007, he’s watched traffic decline, partly due to the economy and the end of COVID economic relief programs.

Previous mall owners weren’t as vocal as Kiezi about their plans, Chong said: “Of course, I support him as a tenant, but I’m staying neutral and see what he does.”

Retailers in limbo

Fairlane Town Center in Dearborn also is in transition, having had two owners in about a year. In spring last year, previous owner Centennial said it was planning mixed-use amenities. Since then, Kohan Retail Investment Group purchased the mall. CEO Mike Kohan did not respond to requests for an interview.

In Clinton Township, the Mall at Partridge Creek plugs along and appears to be held up by its dining options and movie theater. Owners of the mall, Starwood Capital Partners, did not respond to questions regarding the property.

For Candace Dallo, general manager of tailor shop Mr. Sam Tailor, Lakeside Mall is all she knows. She grew up there as her father operated the business in the mall for more than 35 years.

She frequently gets calls from customers wanting to confirm the shop’s location: “They call and ask if we’re still in here,” she said. “Most of the time, we still get to see customers that come all the time as opposed to like everybody else in the mall. I don’t think they’re busy.”

Habre said business for his jewelry store has been down about 50% since the owner signed an agreement with the city for the redevelopment. It particularly hurt the business during the Christmas season, he said.

“When the mall basically announced it’s going to be demolished completely for a new project, which is a pretty good project, actually, not a bad project, that’s when it started really going down,” he said.

Meanwhile, new businesses are still coming into the mall on shorter leases.

“That makes a world of sense,” Mihelich said. “In order for you to pay your bills, the cost of heat, air conditioning, the maintenance, the water. You have to pay those bills, too. … They have to do whatever they can to support it and hold it up during the transition period.”

Among the new businesses is Jalon’s Treats & Sweets. The company is moving from a food truck to a space in the former Mrs. Fields location, said owner Alonna Harris. When it’s time to leave the mall, Harris said she expects she’ll continue to operate a shop in the area.

Habre just wants clear answers on when he will have to relocate so he can plan. He’s considering a second location for the time being, adding that he’d like to come back to the site if there’s retail space available for him.

“We’re going to be in the area and keep serving the community,” he said. “Basically, that’s what it is. … We need timing. We need to know what’s going on.”