MALL STALL

As Kohan buys more malls, tenants live in limbo

Retailers say company fails to invest in their success

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WEST BURLINGTON, Iowa —  Wayne Riniker knew his employer was in trouble — and had been since paying too much for this mall on a rise west of the Mississippi River. Safe from flooding, but underwater on the mortgage.

Default. Receivership. Not happy words for the owner of Westland Mall. It went to the lender, with some $20 million in outstanding loans.

But U.S. Bank wanted out. The Kohan Retail Investment Group, owner of the Berkshire Mall, wanted in.

For months, Riniker wondered what would come next for Westland, which he’d managed for 18 years in West Burlington. “It’s interesting, seeing your livelihood go up for auction,” Riniker tells me.

Kohan paid $1.1 million, about 5 percent of what G.K. Development of Barrington, Ill., owed on its mortgage.

Kohan is the new kid on the block. “As we go through it, we’re learning how Kohan does things,” Riniker says. “We’re trying to hang in there and hopefully we can turn things around.”

That waiting game is underway in Kohan malls across the country. For this series, I’ve spoken with dozens of tenants in seven states. While hurting, their malls could grow if given the right nutrients, they say. Instead, the company keeps buying. Kohan isn’t interested in running malls, a few retailers have told me. He speculates in their value. “They’re not in the mall business,” says a Kohan mall tenant in Indianapolis.

Kohan would not answer questions from The Eagle about how he does business or is  seen by tenants. In the past, Kohan, who also uses the name Mehran Kohansieh, has said some malls he buys are too far gone, telling more than one reporter they’re “disasters.”

Shopkeepers I’ve spoken to say he’s the disaster, nowhere as vehemently as at the Orchards Mall in Benton Harbor, Mich. But in other places too.

• • •

In the beginning, there was perfume. At least for Ranjit Kaur. Two decades ago, she opened her Perfume World kiosk in Kohan’s Richmond Town Square mall on a ridge south of Cleveland. And then opened a shop selling medical uniforms. And then a gourmet popcorn kiosk, her retailing hat trick.

But when foot traffic dropped, after store closings, Kaur closed the popcorn place. It sits lifeless, one of retailing’s fallen.

Perfume may have a special allure here. The first thing I smell coming in is sanitizer. Then I hear a clanking sound. Both drift from a Planet Fitness, the source of a steady beat of metal weights falling back into place, amid flickers from 14 flat-screen TVs.

No pain, no gain. As Kaur could tell you, that formula doesn’t seem to apply in retail. Still, she’s upbeat, despite her sense of living in limbo, waiting for the mall’s owners to act.

“They’re not doing anything to bring it up,” she says of the Kohan group. “I don’t see any improvement. It’s going down every day.”

I ask her which jewelry stores left. She thinks for a second. Alvin’s, Rogers, Zales, Kay. In that order, she believes. The aptly named store Exit? Gone.

Another merchant here tells me Kohan needs to step up. “Since he took over this mall, it’s gone way down hill,” the retailer says. “He doesn’t want to pay anyone. He gets stuff done, but only when push comes to shove.”

Down in the food court, Frank Shaker and Emile Daher sit playing gin. A scrap of paper tracks scores. They come to the mall for walks and cards, not to shop.

Shaker, a former grocer, remembers the mall going up in the mid-1960s; he’s been visiting for half a century. His children worked here 25 years ago. I ask what he’d tell the mall’s owner if hired as a consultant. I get only this: “It’s very tough.” And an observation: “The landlords did not think forward,” he says, speaking of a succession of them. “They waited too long and now it’s too late.”

The mall is fighting that narrative. A sign near one door reads: “Did you hear? Richmond Town Square is NOT closing.”

Two weeks earlier, New York & Co., a chain clothing store, was robbed. It was enough for the company to pull up stakes. Signs outside advertise an 80-percent off sale. Inside, past a security guard, the manager tells me it’s uncertain whether the business will reopen in the Cleveland area.

That leaves people like Tim Preston to carry on. He’s general manager of Fan 4 Life, next to what used to be a Macy’s. His shop looks out on a pair of escalators, up and down, neither moving. “This mall hasn’t always looked like this,” he says.

He waits for things to get better. A redevelopment project in the old Macy’s, which is not controlled by Kohan’s group, is moving forward. Housing is eyed for the former Sears site.

Driving by on Wilson Mills Road, you’d think this Ohio mall was perking along. Shiny cars pack the front of the lot. Look closer. The license plates say only “GANLEY.” A dealer is paying to store cars here.

• • •

So first impressions count. Coming in to the Washington Square Mall, in east Indianapolis, Ind., I see a Target and a Burlington Coat Factory, two big anchors that haven’t gone away.

But the racks seem sparse at Burlington. I quiz a worker about whether the place is closing. “Why are so many people asking me that?” she responds.

Inside, the mall is measled with empty storefronts, but far from terminal.

Tenants tell me they’re frustrated with the owner, who they feel could do more to help them in tough times. “All they are concerned about is collecting the money for the lease or rent,” one tenant says. He wishes the mall spent money to market the place or at least improve its look. A few shopkeepers plan to mount their own direct-mail campaign to local households.

“They have no idea this mall is even open,” says Fred Erdmann, owner of CBD Revolution, one of the tenants involved in that project. He’s from Long Island, like Kohan, and says New Yorkers he knows wouldn’t allow empty storefronts to send this bad message.

“Emptiness. That’s the word for it. That’s the only word for it,” he tells me. “Psychologically, for sales, when shoppers see the stores have closed, it’s not good.”

Chris Scott, who used to manage a mall shoe store, hangs out at Washington Square when not working a warehouse job for UPS. He helps Erdmann make promotional videos.

“There is a lot more that could be done to fix the mall,” Scott says. “Just do little stuff and show people you’re trying.”

I ask him to rate how well the mall is doing, on a scale of one to 10. “I’m going to be generous and give it a four, on the strength of people I know in here who do try.”

When Chris Zinn opened Cumberland Grill recently, he planned for it to be a “ghost” restaurant focusing on delivery. But people in the mall was hungry, so Zinn changed gears and started serving what he calls Midwest comfort food. Like others, he’s found common cause with tenants not getting help from the owner.

They’re in the bootstraps business now.

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“It’s up to us. We want to see our mall succeed,” Zinn says. “It’s up to us owners to keep trucking.”

Edmund Hall feels that way too. I catch him just after he’s pulled the metal grate down over his Ed’s Retail Store. They sell motorized cars for kids. Hall is a former district manager for Cricket Wireless who decided it was time to get into business for himself.

“We’ve started saying around here, ‘Let’s make Washington Square great again,’” he says. I’ve encountered the “great again” refrain in other malls.

I ask Hall what he and others need from Kohan. He rattles it off.

“Just invest in your infrastructure. Invest in your marketing, upkeep, parking and lighting.”

Terence Muncy opened The Dungeon a few months ago in what he calls the “dead side” of the mall. It’s appropriate, because he sells horror collectibles. In a cavernous space behind the shop he also produces live lead-ins to streaming horror flicks. “I don’t call this a mall. I call it a glorified flea market.”

He’d like owners to back him up more. “Some things I need to get fixed aren’t getting fixed,” he says.

• • •

Late last summer, after pushing Kohan for months to address fire code violations, officials in Effingham, Ill., declared his mall “dangerous and unsafe.” Elizabeth Hoene, who manages the Village Square Mall, tried to head it off, saying work to fix a leaky roof was proceeding.

Hoene was worried about the message the city was sending — that the mall, a nearly empty husk in a blighted area south of downtown, was too risky to visit. Kohan was sending money for the work, she said. But a fire department official saw foot-dragging. He told the council that roofers were waiting to be paid.

From his office downtown, City Administrator Steven W. Miller says people in Effingham would like to see good things happen in the mall’s South Banker Street neighborhood. The front of the mall is bleak. Ceiling tiles are missing from the canopy covering the front sidewalk. Empty windows offer views into dark, dusty spaces.

Glik's, a retailer, remains, as do Zales, GNC and a few others.

A new 1 percent sales tax goes into a kitty to help finance rehab work in the area. “We’re trying to get all the tools down there,” Todd Hull, the city’s economic development director, tells me.

But for now, Kohan remains the “X” factor. And so for the future, as with the building problems, Effingham waits.

I get the sense that officials here would be happy to deal with someone other than Kohan. “We’d like to see the mall get repurposed or redeveloped,” Miller says. “We just need the right tenants and the right parties to be involved with it to make it better for everyone.”

Miller grew up south of here and remembers the pull the mall once had on farm families. “I don’t know how much crap my kids bought from Claire's,” he says. Claire’s is gone. So is J.C. Penney. Miller got there in time to buy a suit on sale.

After dealing with the mall’s’ fire code problems, the city is waiting for Kohan to respond to other requests. “We’ve had our challenges and do what we can to make it better,” Miller says.

• • •

Shoppers feel the sense of limbo as well. In Clay, N.Y., home to Kohan’s Great Northern Mall near Syracuse, I catch up with three walkers about 1,500 steps into their indoor trek.

This regular loop, at Rick Falanga’s no-nonsense pace, takes the trio past lots of empty storefronts. I fall in step. An Old Navy outlet lights up one area. Shops still sell jewelry, shoes, candles and greeting cards. A new smokehouse gives these walkers hope. Ditto the store with Syracuse team apparel.

“It’s not dead-dead,” Falanga observes as we round a corner. It’s a kind of living dead, he means.

Sears and Macy’s are long gone. Outside, only a for-lease sign marks the old Sears wing, near a section of parking lot marked with litter, broken glass and the nipple of a baby bottle.

The dozen Kohan malls I visit share a look outside, regardless of how well they’re doing within. Tired pavement. Walls in need of paint. Little structures in collapse, like the large free-standing brick planter box outside Colonial Park Mall in Harrisburg, Pa.

People I meet say the company doesn’t invest much in repairs.

Inside Kohan’s malls, each has a different pulse. Some remain strong, like two I visit in Pennsylvania. But the Great Northern struggles; it would remind Berkshire County shoppers of life at the Lanesborough mall about a year ago.

“Since Sears left, it’s gotten real bad,” says Kathy Falanga, turning a corner as we walk. “There’s nothing to shop for here any more. Nobody comes here. Everybody goes to Destiny.” She’s referring to what might be called a competing Syracuse mall, if the race was close.

The couple’s friend, Valerie Scordo, is pretty peeved about this place. She wants Kohan to invest here. “He’s got to make the places better and clean it up,” she says. We reach the entrance to Dick’s, a remaining anchor store, and the group’s endpoint. “He hasn’t done one thing to make this place better.”

Calvin Hall, owner of Underground RC Raceway & Hobbies is a bit more politic when I stop in. He’s been in the Great Northern for two years. “I do fine because I have a following,” Hall tells me. Three nights a week customers race model cars on an indoor track — but not tonight.

Still, Hall feels the sense of limbo. He’d like to see more places to eat in the mall, or what he calls “attractions,” where people can do things.

“But they can’t survive without people,” he says of new restaurants. “I just don’t get it. This is such a great area.”

I step into Larger than Life Toys & Comics. People play card games at tables up front. Dingo, the manager’s bull terrier-corgi mix, sprawls on a pad near the registers.

Alex Artese, the manager, tells me the last two years have been tough. “It’s a domino effect once the anchor stores pull out,” he says. “It’s a vicious cycle, for sure.”

His shop moved within the mall after Macy’s closed, out to a main corridor. Being near the empty store? Not good.

Two groups gather in the shop the day I visit, one to play a card game called Key Forge and the other to make art. “We build a community,” Artese says of events he hosts. He wishes the mall’s owners put in the same effort.

“They are not doing anything,” Artese says. He pauses. “Like actual nothing.”

Larry Parnass, investigations editor for The Eagle, can be reached at lparnass@berkshireagle.com.


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