Living in the sprawl,
Dead shopping malls rise like mountains beyond mountains,
And there's no end in sight,
I need the darkness someone please cut the lights.
- Arcade Fire, "Sprawl II (Mountains Beyond Mountains)"
The Canadian indie rock band Arcade Fire had a hit in 2012 with "Sprawl II (Mountains Beyond Mountains)." The song lamented that, "Dead shopping malls rise like mountains beyond mountains, And there's no end in sight."
But in the Chattanooga area, a number of once-dead big box stores and shopping malls have found - or will find - a new lease on life.
For example, it only took seven months for the last remaining Kmart in Chattanooga to find a new owner.
Chattanooga developer Bassam Issa, who has bought and developed retail, restaurant and office projects in East Brainerd and in Hixson, in June bought the former Hixson Kmart store on Highway 153 for $5 million. He plans to redevelop the property as Issa Crossing and transform the 116,325-square-foot former Big K Kmart store into a space that several commercial tenants could move into. And Issa plans to lease an out parcel for a new restaurant.
Issa isn't alone in repurposing a Chattanooga Kmart.
Old Kmarts repurposed all over town
At its peak a quarter century ago, Kmart had at least 14 stores in Chattanooga and surrounding cities. In 1991, Kmart was so bullish on Chattanooga that the retail giant launched a $20 million plan to replace, expand and upgrade area stores as part of a $2.65 billion nationwide renovation meant to protect its turf against rival Wal-Mart. Kmart then held the top-selling position in the Chattanooga market.
"This has always been a Kmart kind of town," Tom Winn, Kmart's then area merchandise and marketing coordinator, said while announcing the new store investments in 1991. "Chattanooga has been very good to Kmart."
But the effort to stave off Wal-Mart didn't work. All the Kmarts inside Chattanooga city limits are gone now, and the discount retailer plans to close another store in September in Fort Oglethorpe, Georgia.
As the lights - and blue light specials - have gone dark at Chattanooga-area Kmart stores, a number of the Troy, Michigan-based chain's sprawling buildings have been repurposed.
For example, Mt. Canaan Baptist Church moved from its urban location on North Chamberlain Avenue into a former Kmart at 4801 Highway 58. And B&B Discount Sales sells furniture, electronics and other household goods inside a former Kmart off Signal Mountain Road. The Hamilton County Sheriff's Office's west side annex opened in an old Kmart on Dayton Boulevard near Highway 153.
"We moved into that building probably 15, 20 years ago," Sheriff Jim Hammond told the Times Free Press last year. "It's an ideal location, and it has plenty of parking, which is all good thing."
Other spaces vacated by big box stores have been reused creatively in Chattanooga, too.
For example, a young couple just opened Dart Town Arena, a business in a former Dollar General store at 7331 Lee Highway, where kids can battle it out with Nerf-style foam dart guns.
Malls reinvent themselves
As president of the South's biggest shopping mall owner and developer, Stephen Lebovitz still has the 1998 Time magazine that prematurely proclaimed on its cover "Kiss your mall Goodbye."
Nearly two decades later, CBL & Associate Properties Inc. headed by Lebovitz, still owns and manages shopping malls across America and continues to redevelop and add new tenants for its 118 retail properties. Lebovitz, a third-generation retail developer, bristles at those putting the death notices on the local mall.
No new shopping malls have opened in the United States in the past three years and Credit Suisse projected last month that 20 to 25 percent of the nation's malls could close in the next five years as e-commerce continues to pull shoppers away from traditional brick-and-mortar retailers.
But the CBL president insists that malls aren't going extinct - they're merely changing to capitalize on new trends, technologies and opportunities. The 56-year-old Lebovitz, who succeeded his father in 2010 as CEO of the company founded by and named for Charles B. Lebovitz, stresses that while retailers adapt to e-commerce, more than 90 percent of what Americans buy is still in brick-and-mortar stores.
"We have great locations and properties and, contrary to what some suggest, people want the experiences that our properties can offer," Lebovitz says. "As long as we keep making changes and evolving with the market, these will remain the prime properties in most communities and we'll still be here."
'Suburban town centers' remain vital
Lebovitz say CBL remains committed to shopping centers and malls, even though he now refers to the regional mall as a "suburban town center." The share of retailers in most shopping centers and malls is likely to decline, but that space is being filled with restaurants, fitness facilities, entertainment venues and medical offices, among other users.
"We're always changing and evolving, but our properties remain vital centers for people to visit, shop and do business," says Alan Lebovitz, senior vice president of management for CBL.
CBL sold more than 20 of its lower-performing properties over the past three years as the company has trimmed its debt and focused on building up its other properties.
"We like the platform we have now and our size because we have the economies of scale but we're not too big that we can't focus on each asset," Stephen Lebovitz says.
CBL has successfully redeveloped the Macy's, Sears and J.C. Penney's stores closed at its malls into new uses - often with higher-yielding tenants. Since 2013, CBL has redeveloped 1.7 million square feet at a cost of $270 million, but the new uses are yielding a healthy 8.6 percent pro forma return for the company.
Goodbye Sears, hello H&M
Among eight JCPenney and five Sears closures at CBL malls in the past four years, CBL either sold the property or replaced all but one. At Brookfield Square in Brookfield, Wisconsin near Milwaukee, for instance, CBL redeveloped a portion of Sears into a 22,000-square-foot vibrant restaurant district.
CBL has transformed many of its properties by attracting new and varied tenants.
Since 2010, CBL malls and retail centers have reduced the number of Sears locations from 72 to 45, cut JC Penney's store count from 73 to 52, trimmed Macy's stores from 47 to 33, reduced Ambercrombie & Fitch outlets from 96 to 44, and reduced Aeropostale stores from 76 to 44.
In the same time, CBL boosted the number of H&M stores from four to 34, increased Ulta Beauty outlets from 12 to 29 and added three more Cheesecake Factory stores to the one it had in 2010.
At Hamilton Place Mall, which which celebrates its 30th anniversary next month, H&M and Rodizio Grill are among several new tenants moving into Chattanooga's biggest mall and keeping the nearly 1.2 million-square-foot center fully occupied.
"We have great properties to redevelop and people are looking for experiences and entertainment that we think we can provide," Stephen Lebovitz said. "That gives us great confidence."