Isolated at the south end of Salt Lake Valley, surrounded by farm land, no crowds, no noise . . . .
Sounds like an area fit for wilderness designation. But, it actually describes a 500,000-square-foot shopping mall, South Towne Center, which has hardly lived up to its ambitious billing as the largest mixed-use development in the Mountain West.Instead of a bustling center of commerce in one of the fastest growing communities in the West, the sprawling complex has evolved into a sleeping giant, offering consumers plenty of parking, limited selection and an unusually quiet, solitary shopping experience.
Although South Towne's peaceful environment normally wouldn't be a desired trait for a mall, the property's newest managers - the third in five years - are making the most of it by promoting the "unique atmosphere" as one way of getting people to venture to 106th South and I-15 and check out this curious, quiet shopping center.
"We know it (South Towne) has weaknesses, so we are trying to bring out the positives and strengths," says general manager Neil D. Rollins of Equity Properties and Development Co.
Equity is spending "substantial" sums of money to market South Towne's strengths through promotions and special events, Rollins said, hoping to change public perception that the mall died after its previous owners passed on to bankruptcy.
Conceived on the assumption that Sandy and surrounding suburbs would continue growing as in past years, South Towne appeared a bold and brilliant way to position retailers to capture a booming and affluent market.
No one refutes South Towne's potential, but many question its timing, which local developers say was 5-7 years ahead of schedule.
When the project was announced in 1984, Sandy may have been the fastest growing city in Utah, but housing starts in the area even then had dropped by half since 1978. In addition to the slowdown in Sandy's and Utah's economy causing problems for South Towne, five other major shopping malls located north of 72nd South are aggressively trying to capture their shares of the market.
Rollins said Equity, which manages the property for the owner and affiliate company Zell/Merrill Lynch, realizes the project's problems and competitive challenges, and is committed to see the project through for the long term.
Buying distresed properties and rehabilitating them is what Equity does best, Rollins said. But the South Towne deal presents a new twist. "Unlike many of the projects we acquire and rehabilitate, this one is brand new and won't require remodeling expenses," he said, praising building's beautiful design of skylights and vaulted ceilings and the mall's easy access off I-15.
According to Equity's projections (see chart on M1), the population to support the mall will arrive in the early 1990s. Once the primary market has been captured (see map on M1), Equity plans go beyond the south valley and target northern Utah County and the rest of Salt Lake and Davis counties.
But to attract the people, South Towne has to increase its selection of smaller shops and major department stores. With unstable ownership and slow growth in an overbuilt market, South Towne has been unable to attract a second major tenant to complement ZCMI and increase foot traffic. Anchor tenants (a mall's major department stores) are critical to any project's survival because the large, major stores attract the shoppers and create business for the smaller shops.
Rollins agrees that finding a second anchor is top priority, but he doesn't share the view of many local developers that it's an impossible task.
He explained that Equity owns and manages more than 20 million square feet of retail property around the country, giving it considerable leverage to work deals with large retailers. To date, negotiations are underway with several department stores to locate at South Towne in return for a deal at a less risky location elsewhere in the country.
"There are a lot of companies out there who want to expand in the West and we are working with a couple of stores that currently don't have a presense in Utah," Rollins said, noting he hopes to announce a second anchor tenant sometime in July.
A second major tenant has four options in the size and layout of the store it wants at South Towne, since the project's master plan envisions a five anchor, 1 million-square-foot mall upon completion sometime in the 1990s.
About 60 percent of the mall's 400,000 square feet of developed space has been leased, a hotel is in the planning across the street and Cineplex Odeon Theatres will open a 10-screen cinema complex near the center before the end of the year.
Tenants have come and gone, but there are more now than when the shopping center first opened, and many tenants feel Equity has what it takes to attract anchor stores and make the project work.
Equity is trying to lure retail tenants to South Towne by saying now is the time to get established in what it believes will be "the premier shopping center in the Salt Lake City metropolitan area in the 1990s."
Because the mall isn't the prime property it could be - sales per square foot are a dismal $105 - Rollins said he can "beat anyone's deal" to sign up retail tenants. Equity has launched a specialty leasing program for seasonal merchants or for entrepreneurs interested in short-term commitments to test the waters.
"We feel the current management is more aggressive and able to do more," said Keith C. Saunders, chief financial officer of ZCMI. He noted that the South Towne store ranks fourth in sales out of its 10 stores and is expected to rank second behind its downtown flagship once South Towne is in full flight.
Stephen Schubach, president of Standard Optical, said he has been disappointed at the lack of progress at South Towne during the past three years, but he still believes locating one of their "superstores" in the mall was a good decision. "We feel it is still the place to be in Sandy."
But what if South Towne flops again and Equity finally gives up and moves on?
Not to worry, says Bill Martin, state director of the International Council of Shopping Centers. "It will eventually work, but it may take four or five owners before things stabilize. Each one will put something into it, leave and then the next one will build on that."
As developers always say, Martin noted, "Shopping malls never really die, they just change owners, managers and tenants."