Plan to revive Tower City expected soon
CLEVELAND — Almost 20 months after buying the Avenue at Tower City, Detroit-based Bedrock still hasn’t settled on a revival strategy for the struggling shopping mall.
But during an interview recently, the real estate company’s CEO said he doesn’t want uncertainty about one of downtown Cleveland’s most central — and complex — properties to drag on much longer.
“We’re pushing ourselves to come up with the right answer very soon,” Bedrock CEO and co-founder Jim Ketai said of makeover plans for the 366,000-square foot retail space.
A spate of closings is sending another swirl of rumors through the mall, where tenants are in a holding pattern — waiting to see what comes next, and when.
The Lincoln Tap House and Tower Deli, two affiliated eateries, recently shut their doors. The Next clothing store will follow suit by year’s end. The Sweet Factory and the Children’s Place, a national chain shuttering hundreds of stores, are dark. The food court seems listless.
Some tenants said they’re reluctant, or unable, to update their spaces or invest in their businesses without clarity about the mall’s future.
As leases come up for renewal, Bedrock isn’t entering long-term agreements. And when the company does sign deals, the agreements include clauses allowing for early termination and the option to shift tenants around, if necessary.
Ketai said Bedrock isn’t forcing anyone to move.
But the company, part of the Quicken Loans family of businesses chaired by billionaire businessman Dan Gilbert, doesn’t want to limit its flexibility at the Avenue.
“We need to be smart,” Ketai said. “We don’t want to be in a position where we put a long-term tenant right in the middle of the mall and then say, ‘Oh my gosh, we can’t do a redevelopment.”
It’s possible, he added, that many existing stores and restaurants will fit into whatever the Avenue becomes, whether that’s a renewed mall, a hybrid of a mall and another use, some sort of activity or entertainment center, or something else entirely.
Ketai wouldn’t discuss lease details or talk about specific tenants, though he said he’d like to see Cleveland Cinemas, which hosts the Cleveland International Film Festival, stick around.
Rob Rosenthal, president of Xhibition and Next stores, said Bedrock has been “a great landlord.” He wouldn’t talk about the lease discussions that preceded his decision to close the downtown store. But he also didn’t rule out bringing the streetwear brand back to downtown.
“My hope is that they decide to move forward and bring a phenomenal experience to the mall,” Rosenthal said of Bedrock. “That’s what I’ve told them privately. I think it’s a great property, an iconic property.”
Other tenants have departed due to slow traffic, challenges making rent payments, the chance to move to more visible storefronts or broader retail-industry shakeups.
Roughly 60 businesses remain, down from 100-plus in the property’s heyday. The roster of national tenants includes Bath & Body Works, Victoria’s Secret, Starbucks and Brooks Brothers, the only original retailer left from the early 1990s reopening of the Cleveland Union Terminal as a mixed-use complex with a train station and a three-level mall at its heart.
George Sarkis, owner of the Gourmet Popper popcorn shop, said he signed a two-year lease with Bedrock in June. But that agreement includes an option for either party to break it with three months of notice, he added. Sarkis, who has operated the store at the Avenue since 2001, is biding his time. Whatever Bedrock does, he said, will be an improvement.
“They’re going to do a better job,” he said, adding that he expects Bedrock to bring in higher quality, high-end tenants to cater to downtown’s growing residential population.
Bedrock is hiring a vice president of development for Cleveland — the first position at the company focused solely on projects here.
That person, whom Ketai wouldn’t identify, is likely to start work in early January. Though Bedrock has property managers and other employees in the city, its development team is based in downtown Detroit, where the company controls upwards of 90 properties spanning more than 15 million square feet.
The company’s growing Cleveland footprint necessitates a bigger local presence.
Affiliates of Bedrock and Jack Entertainment, its sister gaming outfit, own five chunks of Tower City: The Avenue; the newly renovated Ritz-Carlton; the adjacent 250 Huron office space, where a large lease deal is in the works; the Higbee Building, home to a casino and offices; and scads of parking.
Bedrock also recently purchased the mostly vacant May Co. building on Public Square, where work on an apartment, retail and parking conversion could start next year.
Ketai said Bedrock’s March 2016 acquisition of the Avenue and parking beneath it, in a $56.5 million deal, was driven by the mall’s central location and its role linking the Ritz-Carlton, 250 Huron and the Jack Cleveland Casino at the Higbee Building. A walkway from the mall also connects to Quicken Loans Arena. Gilbert is the majority owner of the Cleveland Cavaliers.
“We didn’t want someone else to buy it and not do the right thing with it,” Ketai said, adding that Bedrock has tried to clean up and freshen the mall and just signed off on spending for new holiday decorations and seasonal events.
As for what the right thing is? He’s not ready to say.
“I’d love to tell them, if I knew exactly what the plan was,” Ketai said of the tenants. “But I am happy to say it’s going to be something great.”