First of two parts
Can Merle Hay Mall beat the odds?
Mall CEO Liz Holland, who’s been bucking headwinds for years, is about to make her biggest gamble yet on the future of Des Moines’ oldest enclosed shopping center.
Holland’s vision: to turn the mall’s former Younkers department store into a 3,500-seat hockey arena and multipurpose sports facility.
She has been heading this direction since well before 2018, when Younkers and Sears — anchor stores at the mall for 59 years — closed within 35 days of each other. That led some to predict the imminent demise of the mall, founded by her grandfather, Joseph Abbell, in 1959 on the line dividing Des Moines and Urbandale..
Rather than falling back on the embattled department store sector to fill the gaps, Holland already had been seeking new kinds of tenants for the aging facility.
Fighting mall obsolescence with a changing tenant mix
Mall operators “can only re-divide the same pie so many times before somebody loses,” Holland said in a recent interview. So her company has tried to make the pie bigger and give people reasons to come to Merle Hay more often.
In 2005, the mall landed its Target store, a retailer in the middle ranks that generates far more traffic than a typical department store. That helped attract other retailers in the sector, she said.
Then, in 2014, the mall invested in a $14 million renovation to accommodate a major nonretail attraction, Flix Brewhouse Cinema, a restaurant and microbrewery with an eight-screen movie complex. Flix replaced a beloved cinema with a 60-foot-high screen, but only one screen. It was just the second location for the now national chain and has sold some 3 million tickets in the past 10 years, according to General Manager Emily Verke.
The Gameday arcade, with its own bar and restaurant, followed in 2019.
The loss of the department stores was not without consequences, causing Merle Hay to default on its mortgage. But it also became an opportunity. Holland’s company, Chicago-based Abbell Associates, with properties extending from California to Washington, D.C., secured refinancing on favorable terms. It also freed the mall from long-term leases with declining businesses, which Holland likened to “handcuffs.”
That made it possible to envision the arena project, which at $30 million, dwarfs Flix and Gameday in both size and ambition.
Announced in 2020, the facility was originally slated to be a new home for the Des Moines Buccaneers, an amateur junior hockey team that plays in a deteriorating facility in Urbandale that’s almost as old as the mall. Unable to raise sufficient funds to cover its share of climbing construction costs, the team dropped plans to own the facility, settling for being a tenant of the mall, and then pulled out of the project altogether this past July.
But Holland and her company stuck to the plan, saying they had connected with other groups eager to use the arena. Equally important, the cities of Des Moines and Urbandale remained steadfast in their support. With their backing, the project won $26.5 million in state reinvestment district financing in 2021 — funding Holland still hopes to claim, at least in part, as the project moves forward.
Tenants like Target and Kohl’s remain retail anchors for the mall, but Holland sees bringing in new uses as the mall’s best hope for a healthy future.
“What everybody fights isn’t so much each other. It’s obsolescence,” she said. “Shopping has changed, and shopping centers have to change with it.”
A new wave of mall tenants: ‘They didn’t dream of half the uses you have today’
Across the country, cities are facing a similar conundrum: What should be done with hundreds of vacant department and big box stores?
“It’s a huge, costly challenge when large, big box retail stores like this close,” said Carrie Kruse, Des Moines’ interim economic development administrator. “Even going through the exercise of having to demolish properties like that, it’s very expensive.”
Some creative solutions can be seen in the Des Moines metro. A market for bespoke arts and crafts retailers is taking over a former Bed, Bath & Beyond space in Clive. A church is moving into a closed cinema multiplex in Johnston. A U.S. Department of Veterans Affairs medical outpatient clinic occupies a former Toys ‘R’ Us at Southridge Mall, and its former Sears is being converted into a health club.
But the idea of hollowing out a closed department store to make way for a hockey arena is new to metro Des Moines.
At least two exist elsewhere. In Tulsa, Oklahoma, a minor league hockey team owner built two ice rinks in a vacant Macy’s store. The $35 million project opened this spring. And Mason City, in what may have been the first such project nationally, spent $18 million turning a disused JCPenney store into a junior hockey arena. It opened in 2020.
Holland wants to break ground on the Merle Hay Arena in about six months and hopes to have it operating by the end of 2026.
“Our hope will be that we can start demolition in the spring and we can open 18 months later,” she said. “That is what we have been told, based on the experience in Tulsa, is the build time. We are confident we can make that.”
Merle Hay Mall already has paved the way for the arena by knocking down the old Sears store and building a new home on its site for the Kohl’s store, which sat next to Younkers. A popular indoor pickleball complex now occupies most of the former Kohl’s building.
Aaron Hyde, a senior vice president at JLL brokerage in Des Moines who specializes in retail leasing, sees the bright side of shedding anchor tenants whose stores had seen better days.
“When you’re reinvesting in the rest of the property and that tenant is not, it is an opportunity if they go out,” Hyde said. “You look at the leases that were signed 30, 40 years ago. They didn’t dream of half the uses you have today.”
Why Merle Hay Mall matters to metro Des Moines
Despite the setbacks, the mall remains a going concern. Sitting on the northwest corner of the intersection of Merle Hay Road and Douglas Avenue, it’s the heart of a commercial corridor that extends west to downtown Urbandale on Douglas and north and south on Merle Hay.
In fiscal year 2024, the 50310 zip code in Des Moines and the 50322 zip code in Urbandale, both of which include parts of the mall, had $1.66 billion in retail sales and produced $99.6 million in sales tax, according to the Iowa Department of Revenue.
Aging suburbs like the eastern part of Urbandale, where many homes date from the 1950s, face the possibility that, as development moves farther out, they may be left behind by young families seeking newer neighborhoods and amenities. For Urbandale Economic Development Director Aaron DeJong, saving Merle Hay Mall is key to preserving the Douglas Avenue corridor, which is the main shopping area for the city’s east side. It’s also the largest commercial center in northwest Des Moines.
“Douglas for us is a major east-west corridor throughout our entire community, and it starts right at Merle Hay Mall,” DeJong said.
How will Merle Hay Mall build a hockey arena?
Evidence of Younkers’ fast departure from the mall amid its bankruptcy liquidation is abundant inside the old store. Broken glass covers the floor, which is littered with abandoned sales fixtures, some bearing price tags from a long-ago attempt to sell them. A soda sits in a cup atop one of them, where it has been since it was left behind years earlier.
The main entrance now faces toward a parking lot. But the arena’s primary entrance will be from within the mall, in the space where the store’s cosmetics and jewelry departments used to be.
“Through those doors was the men’s department. Down the escalator was home goods and kids,” said Holland, conducting a tour on an October morning.
The Younkers store has 65,000 square feet on two levels, she said. But that division will disappear, creating a hollowed-out bowl for the arena. An eight-court volleyball facility will occupy the northern section of the store, spilling over into the section of the mall now occupied by its food court.
Spectators will enter the arena at the top of the seating bowl, as at Carver-Hawkeye Arena at the University of Iowa.
“Back here is some of the restrooms and the concessions,” said leasing manager Jared Hassman, envisioning the concourse. “Then this is the walkway. Then you would see the ice.”
Everything but the exterior walls will be new. The roof will be raised to make it suitable for hockey and concerts. Dozens of columns on the first and second floors will be removed as the roof is raised.
“It’s not hard because you’re taking the roof off, and you’re taking the floor off,” Holland said. “The downstairs columns hold up this floor, and these columns (that) hold up the roof can all come out.”
Is an arena viable at Merle Hay Mall without the Bucs?
Merle Hay Mall purchased the Younkers building for $1.5 million in 2019 with a loan from the Polk County Board of Supervisors. Originally, plans called for it to be a two-level retail space and family entertainment venue.
But in 2020 the mall and the Bucs announced the team would buy the western third of the mall, which is on the Urbandale side of the border, and build the arena and a practice rink in the former Younkers space and two other ice sheets in the Kohl’s space.
In 2021 the Iowa Economic Development Authority awarded the project the $26.5 million in reinvestment district financing, which was the largest grant in a $100 million statewide round that year. Among projects it beat out was a plan to turn Valley West Mall in West Des Moines into a similar lifestyle center.
Urbandale and Des Moines pledged $3 million in tax support for the arena in the form of a tax-increment financing rebate. That rebate will be paid once the project is built, Urbandale spokesperson Derek Zarn has said.
But plans stalled as construction costs rose from an estimated $40 million to $58.9 million, outstripping the Bucs’ resources. Holland’s company stepped in and scaled the project down to the arena and a practice rink, agreeing to build the facilities and lease them to the team. Later the Bucs became only “one tenant of many” that would use the facility, Kruse said.
The team and Abbell raced to agree to terms by the end of June this year so they could get the state funding. But plans fell apart, and the Bucs departed. This season, the Bucs are playing at the MidAmerican RecPlex after ice compressors in their arena failed. They are reportedly eyeing that facility as a permanent home.
The team’s pullout seemed like a death knell for the arena project, but Kruse said that by then, the project no longer was as dependent on the team for viability.
“It definitely becomes less splashy without having the Bucs as the anchor tenant, but the Bucs in the last half of the negotiations were envisioned as one tenant in a multitenant facility,” she said.
With the mall saying it will still move forward with the project, the state support so far remains on the books. The updated plans will be resubmitted to the Iowa Economic Development Authority at a later date, Holland said.
“I think it’s a better project in many respects than it was two years ago,” she said. “We’ve filed everything that they’ve asked from us.”
Economic impact studies show a need for a youth sports facility like this in Des Moines, Kruse said.
“There seems to be enough users in the market that you could have a multitenant arena with enough users for that type of use to work in that space,” she said.
Without a primary tenant, it will be used for everything from wrestling to trade shows and concerts, Holland said, with a removable floor covering the ice as needed.
“We still love hockey. We still want to be a hockey venue for everything from youth up through hopefully (the Professional Women’s Hockey League) someday. But we needed to pivot this piece,” Holland said, noting that the volleyball courts are an increasingly important part of the plan.
Restaurant owner: Arena plans were ‘a main reason why I bought this’
The arena project has not been pain-free for some tenants of the mall.
Management has been “systematically vacating” stores near the Younkers store over the last few years as leases have ended and management prepared the mall for the arena, Holland said. And that has meant declining business for the food court, now far separated from the retailers clustered in the eastern section of the mall.
Brian Ickowitz, 43, bought the Maid-Rite restaurant there in 2019 because he had heard rumblings of the arena plan.
“That was a main reason why I bought this,” Ickowitz said. “So I hope that they follow through with it.”
He and other food court tenants have been frustrated with the pace of the plan. In 2023, Vietnam Café owner Brenda Tran started a GoFundMe account, to help her stay in business, saying at the time, “I feel like I’m trapped.”
Ickowitz, who already has closed his other Maid-Rite location at Valley West Mall, said sales at the Merle Hay kiosk are down about 40% from pre-pandemic levels. In October he resorted to begging customers on social media to support his business.
The opening last year of Kids Empire — a children’s play center with climbing areas, slides and ball pits — in a space near the food court, and Dinks Pickleball in the old Kohl’s space, also nearby, didn’t help as much as he had hoped. Kids Empire generates some traffic, but it has its own food offerings, and most Dinks customers aren’t interested in the food court, he said.
“The pickleball, it’s more health nuts. They’d stop at Vietnamese (Café) a couple times,” he said. “But not a lot of people come out there.”
Adding to the uncertainty is that food court tenants do not know where they will go if they are relocated in the mall.
Ickowitz’ business has been getting by with a series of six-month leases as he waits for more information about the arena.
Ickowitz needs a drive-thru. So he is contemplating leaving the mall. If mall management would pay for him to relocate, he would consider staying, but he would like to take his franchise somewhere with more traffic.
“If I can get it out of the mall, I would,” he said.
Is retail still part of Merle Hay Mall’s future?
Merle Hay Mall has faced challenges before as stores were built, shuffled and renovated, Holland said. The original Younkers store was destroyed in a 1978 fire that killed 10 people. The rebuilt store was demolished in 2004 to make way for Target, and Younkers moved to the planned arena space, which previously had been occupied by Montgomery Ward and then another department store, Famous-Barr.
Holland said Target’s arrival created opportunities near it to bring in “junior anchor tenants” — national chains from 10,000 to 40,000 square feet, like Five Below, Shoe Carnival, Ulta Beauty, Old Navy and Ross Dress for Less, All have exterior entrances and blend strip center and mall shopping.
“When you would drive up to the mall, it looked like a strip center anchored by Target at one end and Sears on the other,” Holland said. “There just happened to be an entrance to an enclosed mall in the middle, which is what we were trying to achieve. … so that it just wasn’t an enclosed mall.”
With an aim of occupying the mid-market sweet spot of the retail sector, she hopes to attract more tenants like them to compliment new entertainment options. That could turn the mall turn into a “power center” for years to come, Hyde predicted.
“Now you can get those tenants that didn’t historically go in a mall,” Hyde said. “So you can cater to both size shops.”
Owners of other nearby shopping centers are investing in their properties as the community recognizes the area’s importance, he said. He believes giving people shopping and food options while their kids are at games or practices at the new arena is a sound formula for success.
“Experiential retail has just gone through the roof,” Hyde said. “You’re seeing more people spend money on the experiences. They’re still buying the gifts and goods too, but a lot of the population, especially the younger population, has shifted to having these experiences.”
New businesses, like a credit union, have been built in anticipation of the arena, Kruse said. In 2022, Lillis Lofts, the first “affordable apartment” building to be constructed in Urbandale in more than 20 years, was built next to the Younkers store.
“Merle Hay has a long history of reinventing itself and beating the odds,” Kruse said. “That’s the story that the mall continues to live.”
Philip Joens covers retail and real estate for the Des Moines Register. He can be reached at 515-284-8184, pjoens@registermedia.com or on Twitter @Philip_Joens.
This article originally appeared on Des Moines Register: Despite Buccaneers’ pullout, Merle Hay Mall sees still-planned arena as key to its future
Reporting by Philip Joens, Des Moines Register / Des Moines Register
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