Wisconsin braces for shutdown of Bon-Ton Stores, loss of jobs
With Bon-Ton Stores Inc.’s liquidation looming, employees, office building owners and business operators on downtown Milwaukee’s west side — and in malls throughout Wisconsin — are bracing for impact.
“There’s significant concerns about the individuals who could be affected by this,” said Jeff Fleming, a Department of City Development spokesman.
A liquidation would “impact a lot of people,” said Claude Krawczyk, an attorney and board chair of Westown Association, a nonprofit group that promotes downtown’s west side, said before the winning bidder and liquidation plans were announced Tuesday night.
Bon-Ton has 717 employees at the company’s downtown offices and around 50 employees at its adjacent downtown Boston Store, according to recent notices filed with the Department of Workforce Development.
When those jobs vanish, the effects would go beyond the pain inflicted on
the workers and their families.
Nearby stores, restaurants and hotels would be hurt by the loss of BonTon employees who patronized those businesses.
Also, the task of redeveloping both the Boston Store building and the adjacent Grand Avenue mall would become more difficult.
Downtown Milwaukee would be hit the hardest because it includes part of Bon-Ton’s corporate offices (the other offices are in York, Pa.).
The Common Council and Mayor Tom Barrett last year agreed to provide up to $1.9 million to help finance renovations for Bon-Ton’s headquarters at 331 W. Wisconsin Ave.
That building includes a Boston Store on the ground floor and offices on the upper floors. It’s adjacent to the Grand Avenue and is operated by Chicago-based North Wells Capital.
Part of that money has been spent, but “a significant portion” remains in an escrow account, Fleming said. He didn’t have immediate information about the exact amount that’s already been spent.
Bon-Ton has been leasing offices totaling around 170,000 square feet on the third, fourth and fifth floors of the building, as well as 30,000 square feet at The Blue building, 310 W. Wisconsin Ave., according to the Department of City Development.
Bon-Ton planned to combine those offices by July and lease 134,000 square feet at the Boston Store building, with the Boston Store space reduced from 123,000 square feet to 50,000 square feet. City building permits were issued in November for that project.
North Wells Capital also is seeking other office tenants for roughly 100,000 square feet of remodeled space.
That’s competing with efforts by the Grand Avenue’s owners to convert the mall’s food court and other retail space into around 120,000 square feet of offices.
Office tenants for that space, in the mall’s newer building, 275 W. Wisconsin Ave., haven’t yet landed.
The Grand Avenue’s owners, led by Tony Janowiec, president of Interstate Parking LLC, are redeveloping the mall into other new uses, including 50 apartments in the mall’s historic Plankinton Arcade, 161 W. Wisconsin Ave.
Neither Janowiec nor executives at North Wells Capital could be reached Tuesday for updates on their leasing efforts.
The loss of Boston Store also would be one less retailer for downtown workers and residents, said Krawczyk.
“As a downtown resident, I can tell you I shop at Boston Store regularly,” he said. “Apparently there’s not enough of us.”
Angst in the suburbs
Meanwhile, officials in Brookfield, home to Brookfield Square; Greendale, where Southridge Mall is the village’s largest property-tax payer; Glendale, where Bayshore Town Center is located; and Wauwatosa, home to Mayfair, were awaiting more news about Bon-Ton’s shutdown.
Brookfield Square’s ongoing redevelopment by mall operator CBL & Associates Inc. is now focused on demolishing most of the former Sears department store.
That space will be replaced by new businesses that include a Marcus Corp. BistroPlex theater and restaurant complex and a WhirlyBall restaurant and entertainment center. Its financing includes $8.75 million in city funds.
That project is proceeding after CBL in 2017 dropped plans to build a new parking structure just west of the mall’s Boston Store, as well as new store and restaurant space in front of the store.
Chattanooga, Tenn.based CBL is monitoring the possible Bon-Ton liquidation, and has contingency plans for Brookfield Square and other malls, said Stacey Keating, a company spokeswoman.
“We have several replacements under advanced negotiation,” Keating said. “We will announce more details when plans are formalized and leases have been executed.”
A similar situation is unfolding at Southridge.
Plans are proceeding to convert the Greendale mall’s former Sears store into space for Dick’s Sporting Goods, entertainment center operator Round 1 and other businesses that haven’t yet been named. That includes $2.2 million in village funds.
But the closing of Southridge’s Boston Store raises a new challenge for mall operator Simon Property Group Inc.
Indianapolis-based Simon already has been seeking tenants for space now used by another anchor. Kohl’s will soon close its Southridge store and open a replacement store at the new 84 South mixed-use development, in neighboring Greenfield.
Simon has the financial resources, expertise and relationships with retailers to help it land replacement tenants, said Chicago-based retail real estate consultant John Melaniphy.
One possible sticking point: Macy’s, another Southridge anchor, likely has veto power over who could occupy a vacated Boston Store, Melaniphy said.
Neither a Simon spokesman, nor Todd Michaels, Greedale village administrator, could be immediately reached for comment.
A Bon-Ton liquidation also would hurt Glendale’s Bayshore Town Center, where Boston Store is one of its anchors.
Glendale officials are waiting for a redevelopment plan centered on the vacant lot created when the former Bayshore Sears store was recently demolished.
Bayshore’s new owner, an affiliate of New Yorkbased American International Group Inc. in November acquired the mall in return for not foreclosing on the previous owner’s mortgage loan.
The redevelopment plans from AIG and its representative, Cypress Equities, could include a hotel, as well as more restaurants, entertainment centers and apartments, Mayor Bryan Kennedy said.
Cypress has already begun considering how the Boston Store space will play into the overall redevelopment plans, said Glenn Miller, the Dallas-based firm’s portfolio marketing director. He declined to provide specific information, saying those plans are still in the works.
Mayfair, in Wauwatosa, also has Boston Store among its anchors. The mall is operated by Chicago-based GGP Inc.
The city is providing around $9 million to help finance converting an empty Mayfair office building into a 12-floor, 196-room hotel.
“The loss of any retailer is difficult for a community, in particular an anchor store,” said Paulette Enders, Wauwatosa development director. “We look forward to continuing our work with GGP to maintain Mayfair mall as the premier shopping destination in Wisconsin.”
A GGP spokeswoman declined to comment.
Bon-Ton operates Boston Store and Younkers department stores in other Wisconsin communities, including West Bend, Racine, Madison and Fond du Lac. The company has 2,255 employees statewide.
Retail consultant Anne Brouwer said the closing of Boston Store and Younkers “might spell the end” for some malls.
“Particularly if they don’t either have another anchor or their other anchor is somebody who is not in particularly strong shape,” said Brouwer, senior partner with McMillan-Doolittle, in Chicago. “It’s certainly going to have ripple effects through a lot of communities.”
Empty department store locations could provide space for discount retailers such as T.J. Maxx and Kohl’s Off/ Aisle, restaurant and entertainment uses, and fitness centers, said Tom Treder, a principal at Founders 3, a Milwaukee commercial real estate brokerage.
The office and store closings are painful, said Jim Paetsch, vice president of the Milwaukee 7 regional economic development group.
But, he said, “the broader economic trajectory of the region is decidedly positive, presenting more opportunities than ever for talented people.”
Paul Gores and Rick Romell of the Journal Sentinel staff contributed to this report.
Tom Daykin can be emailed at tdaykin@j rn.com and followed on Instagram, Twitter and Facebook.