PROVIDENCE, R.I. (WPRI) — What does the future hold for Providence Place mall as it marks its 20th anniversary?
On Monday night, Target 12 aired an investigation that covered everything from the mall’s finances to how it can compete with Amazon.com. You can find the full story here.
Looking for the Cliff’s Notes? Here are five key facts from Target 12’s report.
1. At age 20, Providence Place is facing challenges …
The retail industry has transformed since Providence Place opened two decades ago, and the mall has felt the effects.
State data obtained by Target 12 shows sales tax receipts at the mall — a proxy for overall sales — peaked at $14.2 million in 2012, but had fallen to $12.2 million as of this past June.
Providence Place has also seen an exodus of higher-end stores that were key to its original identity as an upscale mall, most notably Nordstrom, along with Lord & Taylor, Crate & Barrell, Pottery Barn and Williams-Sonoma.
“It’s going through a transition, based upon the changes in the retail mix,” says Kevin Hively, an economic development consultant who worked on the original mall deal as an aide to Gov. Lincoln Almond.
2. … yet the mall is still doing relatively well.
High-profile departures like Nordstrom aren’t the whole story.
Providence Place’s Chicago-based owner, Brookfield Properties, quickly found a new tenant to fill Nordstrom’s old space: Boscov’s, a Pennsylvania-based regional chain. The Apple Store is a huge draw, generating almost $43 million in sales in 2017. And overall, 97.4% of the mall’s 1.1 million square feet of retail space were leased as of Sept. 30.
“It is a different demographic than what was originally planned for Providence Place,” said Diane McCrohan, a marketing professor at Johnson & Wales. “It was originally thought of to be a high-end mall, and now really it’s more of just your middle-class mall.”
Other local malls aren’t faring as well: Emerald Square was down to 87.4% occupancy last year, the Silver City Galleria was recently described as being “in a death spiral,” and the Swansea Mall closed in March.
3. Experts say the mall must change to stay successful.
A headline in Tuesday’s New York Times captured the challenges facing old-school brick-and-mortar stores: “Chasing Amazon, Retailers Are in a Never-Ending Arms Race.” The digital revolution has changed shopping habits in big ways.
“I expect that we’ll see more restaurants in the Providence Place mall on the first floor,” McCrohan said. “I think that we’ll also see some more entertainment.” The key, she said, is offering experiences that can’t be replicated on a smartphone, whether that’s virtual skydiving or a CycleBar.
Added Hively, “When we think of the term ‘mall,’ we think of retail — and that’s shifting to kind of more of an entertainment experience, of which retail is one portion of that.” He cited other malls around the country that are now home to museums, community colleges, medical offices and apartments or condos.
4. Sales tax receipts from the mall covered its state debt.
Gov. Lincoln Almond struck a deal with Providence Place’s developer soon after taking office in 1995 to get the project done: the state would float a bond to help pay for construction of the mall and its parking garage, to be paid off by sales tax revenue generated there.
It worked: last month the state of Rhode Island made its final payment on the mall debt, which totaled $73 million in principal and interest. The mall has generated $249 million in sales tax receipts over that time, far more than needed to cover the bonds.
“It’s a Rhode Island success story,” says Joe Larisa Jr., who was one of the mall deal’s negotiators as Almond’s legal counsel.
Hively said the mall accomplished other objectives, too, by bringing retail revenue back to Rhode Island that had been going over the border to Emerald Square, as well as filling a large portion of the land near the State House and boosting the Convention Center.
5. Providence wants more revenue from the mall.
As Providence’s mayor during the mall debate, Buddy Cianci signed a 30-year tax treaty with the developer of Providence Place to sharply limit how much the mall would have to pay the city in property taxes. (Cianci was so frustrated by the terms he once said he wouldn’t sign it until the fat lady sings – so he invited a fat lady to sing at the City Hall signing ceremony.)
Estimates at the time said the city was giving up well north of $100 million in property tax revenue, which mall backers said was worthwhile because of the project’s other economic development benefits. This year the mall will only pay Providence $970,000 – a far cry from the $25 million it would owe at full value.
The tax treaty doesn’t expire until 2028, but both sides are already thinking about what’s next. Mayor Jorge Elorza said his aides have held preliminary discussions with the mall’s owner, which has hired three City Hall lobbyists to press its case.
The mayor would like to see a revised deal that yields more revenue for the city. “The idea is they increase their payments over the next 10 years, and after 10 years it doesn’t go back down to what it is now, but it’s less than that $25 million,” he said.
Watch the original report below.
Ted Nesi (firstname.lastname@example.org) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook