Macy’s announcement late Wednesday that its Cortana Mall store is among 40 that will close across the U.S. over the next two months is bad news for the aging shopping center—at least for its future as a retail center.
But the closure of the Cortana Macy’s store—which will leave the 1.4 million-square-foot mall with two anchor tenant vacancies—doesn’t necessarily mean the end of Cortana, local commercial real estate observers say. Rather, it suggests the beginning of the end of Cortana as we know it.
“What do you in a situation like this? You convert it to a different use,” says Matthew Laborde, a commercial broker with Beau Box Commercial Real Estate. “A lot of properties in north Baton Rouge have gone that way. They’ve morphed into something different.”
Laborde and others believe Cortana’s 40-year lifespan as a retail center is near its end. But as with other centers around the country, real estate agents see potential for other uses— particularly industrial, office or medical.
“I can see some type of special use of that square footage,” says Donnie Jarreau of Donnie Jarreau Real Estate. “Whether it’s a call center or a church or something else. There is a definitely a use for it.”
To an extent, this is already happening. The former Service Merchandise anchor space, which was occupied by Steve & Barry’s in the mid-2000s, is now home to Virginia College. Several smaller spaces in the mall are now leased to tenants like the U.S. Post Office, the Council on Aging and military recruitment offices. More re-tenanting is likely.
But the transition won’t be easy for the retailers that still have storefronts in the mall.
“The problem Cortana is going to have is that small tenants inside the mall benefit from the traffic of an anchor like Macy’s,” says Jonathan Walker, a commercial broker with Maestri-Murrell Real Estate. “When anchors start to go away it’s just a domino effect and the small tenants go away as well.”
How Cortana’s owner, Las Vegas, Nevada-based Moonbeam Equities, plans to deal with that dynamic is unclear. Company officials could not be reached for comment this morning. An executive with the mall’s property manager, The Woodmont Company, also declines to comment, but says a written statement will be forthcoming this morning.
Moonbeam Equities acquired Cortana in March 2013 for $6 million, which was widely considered to be a bargain price despite the mall’s then 54% occupancy. At the time, a Moonbeam executive said the firm’s plan was to turn the property around, a strategy it was attempting with similar underperforming shopping centers in multiple markets around the country.
Some of those malls have since become mixed-use developments. Others are now home to colleges, churches, hotels, medical facilities and offices. Could that happen at Cortana? It’s too soon to say for sure, but what is fairly certain is that a traditional retailer likely won’t be leasing Macy’s space.
“Any retailer that is going to be attracted to a mall is going to eye the Mall of Louisiana first,” Walker says. “There is just not an attraction for other retailers to join Cortana.”