Economic Prediction for Southern Hills Mall

Mar 15, 2019

Southern Hills Mall, Sioux City, IA
Credit Siouxland Public Media

Megan Gubbels sets out to find some deeply-discounted deals, two-days before Sears closes after more than 90-years in Sioux City, Iowa.

“I am a little disappointed especially, since we lost Younkers not too long ago.  It does worry me a little bit because the mall is becoming a little more limited on what we can buy.”

Gubbels, a mother of two, with one on the way, traveled a half hour each way from Emerson, Nebraska to run a few errands. 

“Well, I had a doctor’s earlier today and then me and my daughter decided to stop by the mall.”   

Inside the store, Gubbels finds a dwindling stock of merchandise.  A few racks of clothing, tools shoes, odds and ends.   

Meghan and Adelyn Gubbels, Emerson, NE
Credit Submitted

Her two-year-old daughter, Adelyn, seems captivated by a “Baby Alive” doll.

The Southern Hills Mall use to be the place to go when Gubbels was a teen.

“I’m 35.  We lived in a rural community so coming to Sioux City to the mall is a big treat and a big deal.”

Gubbels admits her habits have changed a little over the years.

“It’s harder when you have small kids to manage juggling too much.  We kind of hit the main spots and head out.”

Economist J. Jeffrey Zink is an Associate Professor of Economics at Morningside College in Sioux City. 

“What kind of future do you predict for the Southern Hills Mall?”  

“For right now it is not a very bright one.  Two of the three anchor stores are gone.  JCP, not in good financial state right now.   Once all three anchor stores are gone.  Then, I don’t see much a future it will have to be repurposed somehow and I’m not sure what that is going to be .”

Washington Prime Group the parent company of the Southern Hills Mall says plans are in the works to fill the space left behind by Sears and Younkers.   

Washington Prime allocated $100 to $125 million dollars for redevelopment projects at properties across the country. But, didn’t give any specifics for Sioux City.

“I think it is a company investing in malls in the right areas.  So, I think that’s good for the future of the Southern Hills Mall.  I think they bought it at a reasonable price from what I under.  So, they have room to invest in it.”

That’s Sioux City’s Economic and Community Development Director, Marty Dougherty.

“I don’t think malls are going to look the same.  I think they are going to evolve.  And, I think you are not going to see the big enclosed mall much longer.  I don’t have a crystal ball.  That is my guess, that’s what I see happening.”

The first mall appeared in the Minneapolis area in 1956.  The Southern Hills Mall arrived in 1980.  Companies quit building major indoor malls more than a dozen years ago.

“Over the last 40 or 50 years there has been a definitely change in the distribution of income, more to the poles.  So, you have some people really wealthy and even more poor and so that hallowed out the middle class which was basically Sears customer base.”

“Demographics are changing again. That generation is dying off.  The new generation is smaller and poorer because of the distribution of income in the last 50 years.  They don’t feel like they want to shop that way anymore because of the advent of E-commerce and Amazon emerges and the ‘death’ of the American Mall.”

Professor Zink says mixed-use facilities, like the downtowns of years ago, could be the way of the future. Places with more entertainment, more culture, housing and attractions.

The AMC Theater at the Southern Hills Mall recently underwent an upgrade.

“I see more people in the front rows which never happened before since the renovation.  Just a lot more people coming in and they seem to be happier because like they are chilling and stuff.”

Hope Hulit, Newcastle, NE

The changes get an “A” rating from 17-year-old Hope Hulit from Newcastle, Nebraska.

“I’m here to see Captain Marvel.  I’m excited for it when I saw the teaser trailer drop.“

Hope is also a regular customer of the Southern Hills Mall.

“I think more people are coming now days not a lot of people are here because it’s during school.  But, after school people flood after school on Friday and Saturday night.”

“Are you saying you are skipping school?” 

“Our boys made it to state basketball that’s why I am here.”  

Like Hope proves, the Southern Hills Mall does attract people from a wide area.  And, Marty Doughtery says that attraction grabs the attention of developers, investors and stores.

“One of the strengths of that mall and of Sioux City in general it there not a lot of similar sized shopping centers in 100 miles.  So, we are a regional center for things like retail, healthcare, various services, that is our strong point.”

Professor Zink admits his financial forecast could be a little cloudy.

“But, again I am an economist and my predictions aren’t that accurate.  That just a gut feeling from what I have read and what I see at the mall.”

This is what we did see at the mall.  Good foot traffic for early on a Friday afternoon.  

In a written statement, the General Manager says more than 80 national and local tenants fill the shopping center.  We counted seven empty stores.  Plus, three will soon be gone; Payless Shoes, Crazy 8 and Charlotte Russe. 

“I see especially on the weekends people are walking along the hallways.  But people aren’t really walking into stores anymore.  Like there will be 10-15 in our stores, hundreds out there but people are just not interested anymore.”

That’s a retail employee who didn’t want to use her name or identify her store.  She sees the first-hand impact of virtual transactions.

“I think a lot of online shopping is actually kind of taking away the actual experience of shopping in store.”   

“I feel like it’s getting to be kind of becoming a laziness thing almost.  People shopping on line think it’s easier.   You can browse for things online shopping online. You can send it back if you don’t like it.  I really encourage people to keep stores alive.”

Megan Gubbels enjoys her afternoon out at the mall.  Even though she didn’t find anything to buy at Sears, and her daughter didn’t get the doll, she’s not ready to turn to the internet for her shopping experience.

“What are you going to do?  I think the on-line shopping seems like it’s taking over.  I am someone who likes to come and try things on and not worry about mailing them back.”

Extended statements from Southern Hills Mall management and Washington Prime Group:

“Along with our more than 80 national and local tenants, we remain focused on delivering a dynamic experience for our guests. As for the announced closing of Sears, we are exploring opportunities to redevelop that space.” – Matt Pawlowski, General Manager of Southern Hills Mall

“As it relates to traditional department stores, we continue to significantly reduce exposure. Since 2015, Washington Prime Group has completed, commenced or approved 15 department store repositioning projects, ranging between $5 million and $20 million. These projects bring dynamic new uses to the center and reflect increases in traffic and sales.” – Kimberly Green, spokeswoman for Washington Prime Group, the parent company of Southern Hills Mall

“Tenant-driven redevelopment remains one of our most intriguing value propositions. Washington Prime Group has allocated between $100 million to $125 million for redevelopment projects across our core portfolio in 2018. Current redevelopment includes 34 projects ranging from between $1 million to $60 million with an estimated project yield of approximately 10%. We also continue to activate common area space with new initiatives such as local craft beer bars and restaurants, as well as events and activities that are relevant to our demographic constituency.” – Lou Conforti, CEO and Director of Washington Prime Group, the parent company of Southern Hills Mall.

“We continue to see a demand for space within our local market from both national and local tenants, so when there is a store closing, it provides an opportunity for us to introduce new tenants to our guests.” – James Clakeley, Marketing Director of Southern Hills Mall

“We have current plans to reposition all spaces at the mall and our leasing team is currently in discussions with multiple potential tenants.” – James Clakeley, Marketing Director of Southern Hills Mall

“We do not announce new tenants until leases are fully executed by all parties involved, but we will announce plans as soon as we are able.” – James Clakeley, Marketing Director of Southern Hills Mall

“We continue to focus on delivering the best experience for our guests. Southern Hills Mall will continue to deliver a combination of retail, dining, entertainment, activities and events to keep shoppers engaged and returning often.” – James Clakeley, Marketing Director of Southern Hills Mall