The Retail Implosion Nibbling at 12 Oaks Mall

[Lowell]

I hadn't been to 12 Oaks Mall in while and was surprised to see so many vacancies. While I would guess the occupancy is still around 85%, and late PM of a beautiful spring day Wednesday is not a hot time, both the lack of shoppers and the number of vacant stores left an undeniable aroma of gauntness--giving me, ever so slightly, a whiff of the early fading days of Northland. The online shopping world is taking its bite of one of the mightiest metro Detroit malls.

Looking toward Nordstroms, vacancies above and below.






And finally there is troubled Sears which I found to be a ghost town walking through it to and from my parking spot.

[MikeyinBrooklyn]

Brick and mortar stores will continue to decline in size and number. They'll never go away completely, but they are in a rapid decline. Successful retail centers will combine some stores with things that people can't get online: namely, food, beverage and entertainment. And big department stores will continue to disappear. Higher end ones will be around longer, though, because the in-store shopping experience in luxury brands can't be easily replicated online.

[Bham1982]

Twelve Oaks is a highly profitable mall. The vacancies near Nordstrom are due to the mall relocating/expanding H&M and a few other stores, and replacing with American Doll or something.

That mall [[alongside Somerset) has nothing to worry about.

[Mind field]

That mall [[alongside Somerset) has nothing to worry about.

I'm sure that's what they said about Northland as well.

[Bham1982]

I'm sure that's what they said about Northland as well.

Ridiculous. Northland was in bad shape for 40 years, and it had nothing to do with retail's current challenges. Northland declined because it was viewed as a "black mall" and then, later, the 8/Greenfield area was perceived [[probably correctly) as rundown and dangerous.

12 Oaks [[and Somerset) typically have waiting lists for stores, and are valued in the many hundred of millions. They're extremely profitable properties, with enviable demographics.

Listen, I get it. This is DYes. We're supposed to push an agenda of "Detroit is booming and sprawl is on its death knell". But this site [[which is great) loses credibility when promoting fakenews.

[hybridy]

Ridiculous. Northland was in bad shape for 40 years, and it had nothing to do with retail's current challenges. Northland declined because it was viewed as a "black mall" and then, later, the 8/Greenfield area was perceived [[probably correctly) as rundown and dangerous.

12 Oaks [[and Somerset) typically have waiting lists for stores, and are valued in the many hundred of millions. They're extremely profitable properties, with enviable demographics.

Listen, I get it. This is DYes. We're supposed to push an agenda of "Detroit is booming and sprawl is on its death knell". But this site [[which is great) loses credibility when promoting fakenews.

strongly agree here. 12 oaks is owned and operated by taubman. notice how taubman sold fairlane and partridge creek before things really started to meltdown. their strategy is everything brick and mortar retail has been focused on lately - outlets + high end with 'dining + experience' tenants. i'm sure they have a strategy already in place for sears spot. something like this, i'm sure.

https://www.bizjournals.com/milwauke...opment-of.html

[Towne Cluber]

Sorry Lowell, but you saw what you wanted to see. Sears and a Wednesday afternoon are a little too obvious. The demographics of the area and the line up of Twelve Oaks [[Nordstrom, Cheesecake Factory, Tumi, Lululemon, California Pizza Kitchen, and Apple) tell a very different story.

[jcole]

I went to a usually very busy grocery store on Maple in Troy late yesterday afternoon around 6. There were 4 cars in the lot. Everyone is out enjoying the first couple of summer like days after a really shitty April. When the heat becomes usual instead of a novelty, you will see people flocking back inside to enjoy the air conditioning while they shop and browse

[DetroitGuy423]

12 Oaks for as long as I can remember as always had some vacancies here and there. new stores open, old stores close...I don't think its ever been 100% filled, but I don't think we can write its obituary just yet. The old, tired, and dated malls [[Eastland, etc.) will continue to close down, but the malls with high-end stores like Somerset and Twelve Oaks will be around for a while.

[Johnnny5]

One thing to consider is that we're at or near record low unemployment, still hovering just above record low interest rates and our economy is buzzing right along. I think Novi and Twelve Oaks will be fine as long as the economy stays as it is or improves as most struggling retailers can stay afloat when money is cheap and consumers are still spending. When the high times end [[Which they will) the in person retail business is going to be one very ugly sector to be in, and overbuilt brick and mortar retail areas such as Novi are going to bear the brunt of it.

[iheartthed]

It has been at least 10 years since I was in 12 Oaks. It looks like they haven't updated it since it was built.

The mall concept in general seems outdated, but from the pictures 12 Oaks looks stale compared to Somerset.

[3WC]

If a commercial property doesn't have a 5% vacancy rate it's an indication the rents are too low.

When seeking financing for a 100% occupied property an institutional lender will underwrite it as if there were at least a 5% vacancy rate.

[Lowell]

Sorry Lowell, but you saw what you wanted to see. Sears and a Wednesday afternoon are a little too obvious. The demographics of the area and the line up of Twelve Oaks [[Nordstrom, Cheesecake Factory, Tumi, Lululemon, California Pizza Kitchen, and Apple) tell a very different story.

I have never been in 12 Oaks when there wasn't at least one vacancy and sometimes a few. The place is profitable and viable.

It only became significant to me when I noticed it. It's a bit like driving down a long block of houses and seeing one or two empty or beat up houses. I think nothing of it. But some point I do.

I also consider my ever-increasing online shopping and my ever-declining visits to retail shops. It's a tough time for retail, I'm typical of the problem and the effect is noticeable.

It's why chose the word nibble for the title.

[RO_Resident]

12 Oaks [[and Somerset) typically have waiting lists for stores, and are valued in the many hundred of millions. They're extremely profitable properties, with enviable demographics.

Listen, I get it. This is DYes. We're supposed to push an agenda of "Detroit is booming and sprawl is on its death knell". But this site [[which is great) loses credibility when promoting fakenews.

Actually, I think that Somerset is suffering from the structural changes to the retail industry.

There are a handful of vacant storefronts in the mall. In the past, most stores had to shut down for their periodic refresh. Now, there is enough vacancies for them to set up temporary locations in other parts of the mall.

Their certainly doing better than other malls in the region, but they are nowhere near the 100% occupancy of a few years ago. And as you suggest, it was probably closer to 105% occupancy.

The location is not dying, I wouldn't even say it is sick [[okay, maybe just a case of the sniffles). It's just not the juggernaut of a few years ago.

[MikeyinBrooklyn]

I don't think I've ever been in 12 Oaks Mall [[I'm a need-to-shop only kind of guy, and never go to a mall to just hang out). I can't speak to its specifics. But retail is declining across the board. The last and strongest holdout stores will be niche specialty shops and high-end stores. Yes, Somerset and a few others will weather the storm better. But make no mistake, every day people buy more and more online. To compete, retailers need to make a special event out of a trip the shopping center.

[Towne Cluber]

Twelve Oaks Mall was built 40 years ago and underwent a 40 store expansion and renovation in 2007.

Despite having a waiting list--Somerset has almost always had 2 or 3 vacancies at any given time, which is not uncommon nor is it a sign of any [[impending) downturn. Furthermore, I can't think of any store there that shutdown during renovation rather than opening in a temporary space.

[Bham1982]

strongly agree here. 12 oaks is owned and operated by taubman. notice how taubman sold fairlane and partridge creek before things really started to meltdown.

Exactly. Taubman sold its "B" properties and kept the "A" properties, including Twelve Oaks. It's one of Taubman's top Midwest properties.

Some of these vacancies [[at least by Nordstrom) are due to prosperity, not decline. Again, H&M is building a huge multilevel store, when it used to have a small store. This requires large, empty blocks of space. I believe Lululemmon is also relocated, and building a much bigger store.

When a new store enters the Michigan market, Twelve Oaks [[alongside Somerset, and in some rarer niche cases, Birmingham and Downtown/Midtown) are the first options.

Here's an article about an online women's retailer, opening it's first MI store in Twelve Oaks [[right next to Nordstrom, no less, the space possibly photographed by Lowell.).

https://www.freep.com/story/money/20...gan/550407002/

[Bham1982]

If a commercial property doesn't have a 5% vacancy rate it's an indication the rents are too low.

This is another thing. Fifth Ave. in Manhattan will always have more vacancies than Fordham Rd. in the Bronx. That does NOT mean that Fifth Ave. is less desirable; it's just a very different tenancy and ownership structure.

While 12 Oaks is no Fifth Ave. [[or even Somerset) owners like Taubman want the "right tenant" and are willing to wait to curate the appropriate retail mix.

[JBMcB]

12 Oaks isn't going anywhere. I was there a couple of months ago picking stuff up at Sears at lunchtime, and the place was hopping. At noon on a work day. The empty storefronts are a recent development as of last year, as other posters have said, when H&M decided to expand.

The same thing happened to Somerset when Zara opened up, a bunch of stores had to relocate causing more empty storefronts for a year or so, but they are quickly filling back up.

The low end malls are dying. The mid-range malls are hanging on. The high end malls are doing fine. I think there will always be a real-estate market for indoor shopping areas, especially in places where the peak shopping season is cold and snowy.

[3WC]

Bham1982 is correct, especially when it comes to Taubman Companies.

Al Taubmen considered himself a retailer rather than a real estate mogul. He at was at one time the largest shareholder of Macy's, owned the east coast Woodward & Lothrop Department Store chain, and was a large shareholder of many other retail merchants. He had a special business relationship with Milt Petrie, owner of Milady Shops and 1500 other womenswear stores, who was one of his partners in the Irvine Ranch acquisition.

Taubman's autobiography, "Threshold Resistance" is a fascinating read.

To confirm Bham's point, a Taubman mall lease was a thing of beauty; I've negotiated a couple. Taubman controlled the hours a tenant must remain open, it's location in the mall, the goods it could not and must sell, and every other aspect of the tenant's operation. Taubman was as much a controlling partner as the landlord.

[mwilbert]

This is another thing. Fifth Ave. in Manhattan will always have more vacancies than Fordham Rd. in the Bronx. That does NOT mean that Fifth Ave. is less desirable; it's just a very different tenancy and ownership structure.

While 12 Oaks is no Fifth Ave. [[or even Somerset) owners like Taubman want the "right tenant" and are willing to wait to curate the appropriate retail mix.

I don't know anything about 12 Oaks, but I have observed more vacancies on 5th Avenue than there used to be. And this doesn't seem to be just anecdotal: http://www.nreionline.com/retail/hig...-falling-rents

Note that neither I nor the article are implying that high-end retail is dying or anything of the sort. Retrenching, perhaps.

[clubboss]

Regardless of the day or season; it doesn't even look like it's open

I hadn't been to 12 Oaks Mall in while and was surprised to see so many vacancies. While I would guess the occupancy is still around 85%, and late PM of a beautiful spring day Wednesday is not a hot time, both the lack of shoppers and the number of vacant stores left an undeniable aroma of gauntness--giving me, ever so slightly, a whiff of the early fading days of Northland. The online shopping world is taking its bite of one of the mightiest metro Detroit malls.

Looking toward Nordstroms, vacancies above and below.






And finally there is troubled Sears which I found to be a ghost town walking through it to and from my parking spot.

[iheartthed]

I don't know anything about 12 Oaks, but I have observed more vacancies on 5th Avenue than there used to be. And this doesn't seem to be just anecdotal: http://www.nreionline.com/retail/hig...-falling-rents

Note that neither I nor the article are implying that high-end retail is dying or anything of the sort. Retrenching, perhaps.

I have worked along the tony stretch of Fifth Avenue for a few years. There was definitely a bit of turnover but it's a long way from becoming abandoned. It seems like there is a bit of a retreat of the ultra-luxury retailers, but that space is still being absorbed. For instance, Microsoft converted a former Fendi space a couple of years ago. Across the street Uniqlo built their largest store in NYC.

However, this is completely different from a dying mall situation. Fifth Avenue will always have shoppers as long as it's a business and tourism hub. Twelve Oaks, or any other enclosed mall, doesn't enjoy that luxury. If the tastes for the enclosed shopping mall go away - plenty of evidence suggests that to be a national trend - then it is over since it is a model built on people going out of their way to get to it.

[Luke09]

Brick and mortar stores will continue to decline in size and number. They'll never go away completely, but they are in a rapid decline. Successful retail centers will combine some stores with things that people can't get online: namely, food, beverage and entertainment. And big department stores will continue to disappear. Higher end ones will be around longer, though, because the in-store shopping experience in luxury brands can't be easily replicated online.

I agree with this. The Westfield Mall here in the Century City neighborhood of LA is becoming more of food destination v shopping, slowly but steady. The mall isn't going anywhere anytime soon, its more about re-positioning it, and I'm sure the owners of it are doing quite well. 12 Oaks mall has demographics on it's side, and so I'm guessing they are or will follow a similar path with restaurants, shops and perhaps even residences

[gencinjay]

I had to go to 12 Oaks for the first time in a couple of years just before Easter. Since it was a Saturday there were a lot of people walking around. I was actually a little surprised by how many. I also noticed the empty stores, but most had signs of stores that were coming to fill them.