Loss of Arborland's Borders signals major shift for Ann Arbor retail center
When Arborland Center was listed for sale in 2005, I wrote a column that described the property as "a pinnacle of retail redevelopment in southeast Michigan."
That was just a few years after Joseph Freed & Co. and partners demolished the city's first shopping center and built in its place a power center that brought some of the nation's most-sought retailers to Washtenaw County.
Six years later, there's a different situation at the corner of US-23 and Washtenaw Avenue, a circumstance made more obvious by Wednesday's announcement that the Borders store in Arborland will be closing as part of the chain's bankruptcy.
Arborland itself also faces a turning point to hold onto - or even regain - its real estate position in this market.
In some ways, Arborland isn't alone. The world has changed since the economic downturn hit the consumer hard, sending unemployment rising and retirement accounts falling while home values plummeted just as quickly.
Those ripple effects are leaving their marks on our city's real estate. But so are other factors: Industry changes for individual stores. Retail overdevelopment. Smaller trade areas. Commercial property devaluation.
Arborland, at one time 100 percent leased and a homerun investment even at $102 million, now moves toward more of a victim of circumstance than winning real estate play.
It's not a statement that I make lightly: This center anchors my own east-side neighborhood, too.
But as a real estate writer, I also can't ignore that this center will be 15 percent vacant once Borders leaves. And this happens after Arborland's buyers, led by Amcap Inc., paid a price that likely doesn't leave room for profit in a vacancy rate that high.
There's also the duration of the vacancies: The former Circuit City store, also a victim of bankruptcy, still stands vacant. So does the long-closed Bombay store, which lasted a short time near Potbelly.
I'm told that with Big Box retailers now searching the market again, there will be a decent chance of filling those spaces. In 2009, no one was leasing. In 2010, few were. This year, there's a renewed chance.
But so far, the newest tenant at Arborland is Diva Nails, an independent salon just a few doors from Starbucks, which reportedly has paid the highest rental rate in Ann Arbor, close to $50 per square foot.
All of this has an impact on the city: The taxable value of the center, along with many retail sites in the area, fell from 2009 - its first year-over-year drop. Today, its assessed value is $31,859,700, about $1 million lower than the previous year.
That was enough to place Arborland at number three on the list of the city's largest taxpayers in 2010, when mall owner Amcap Inc. paid the city $1.89 million in property taxes.
With commercial values in the city falling 7.7 percent on average in 2011, and the mall vacancy growing, that ranking could fall this year.
It's a scenario that few could envision a decade ago, when Arborland served the region. It opened the door to developers who recognized what a quality retail center - with the right tenant mix - could bring to a community.
But it also spurred competition in a market where the potential to expand seemed endless.
Huron Village became the "shiny new center" a few years later and a few blocks west, with a different mix. Green Oak Village Place was built near Brighton, trying to show Michigan that a lifestyle center could work in a four-season climate. Major retailers like Meijer, Target and Walmart expanded in the region, and smaller centers grew between them.
But now retail chains are downsizing and slowing their expansion. So who's left not just to move in, but to create a unique shopping mix?
Today, Arborland occupies a significant place in the city's development history. But the Borders closing there is forcing it to recognize a painful truth: It needs to fight for its foothold in the retail sector and it needs to fight to stay vital to shoppers.
It was a homerun more than a decade ago. Today, it's just another option in a market with fewer retailers seeking a Big Box location in a center filled with other anchor stores and "junior anchors." Even some stores in that center recognize that they - like Borders - were operating a business model that needs less expensive physical space and have sought to downsize.
Now, just as Ann Arbor hopes that Borders is making hard decisions that help it survive, I'm hoping that Arborland owners and managers can do the same thing with this property.
It's not a losing proposition. Many, in fact, say the Arborland Borders store was profitable, if a little too close to Barnes & Noble.
The property is strong in other ways, too: It's a key shopping destination for not just the east side of Ann Arbor, but much of Ypsilanti, a significant population base. It still has highway access and visibility. Some stores there are unique to the area, like Hiller's Grocery, Toys R Us and Arhaus Furniture.
Outside factors could help, too. The mall owner on the south side of Washtenaw seeks to upgrade that property, and several communities are targeting the Washtenaw corridor for attention and upgrades.
The challenge of today, enhanced by the departure of Borders, is to identify what Arborland needs to move it into its next phase without losing its value, which in turn keeps it valuable to the community.
Paula Gardner is Business News Director of AnnArbor.com. Contact her at 734-623-2586 or by email. Sign up for the weekly Business Review newsletter, distributed every Thursday, here.
Comments
15crown00
Fri, Feb 18, 2011 : 7:18 a.m.
for any number of reasons Arbor Land's time has come and gone.there was a time i would go there frequently but now other than Borders -and there only once-i haven't been there in 5 years.don't like the store mix and the way the traffic is routed is terrible. About 10-15 years ago when i worked in Toledo there were 4 Major Shopping Centers and several strip centers.now there is 2 major and still the strip centers and oh ya several new Big Boxes. i hate to say this but maybe Big Boxes are our future. As far as all the numbers about sq. ft. prices etc. goes it's not really important.All that really counts is can u draw customers to your business and does the cash register ring.Numbers can prove any point you want them to prove and that's about how valuable they are.Just look at ports statistics.
KathrynHahn
Fri, Feb 18, 2011 : 6:13 a.m.
People are probably going to think I'm some sort of sentimental idiot, but I miss the days when A-land was an indoor mall with a food court, bookstores, clothing stores, and much more variety. Plymouth Mall reminds me of a "slimmed down" version of what A-land was. At least it put those central parking spaces to use. There definitely needs to be two eastbound exits (they already have the light between Chili's and Starbucks, why not add a left turn lane?) Currently, trying to turn left, there is a constant bottleneck behind Belle Tire, and at least one annoying beggar taking advantage of all the cars waiting through that light. I say bring back the bus stop, do some major reconstruction (jobs!) move the buildings out a bit, enclose it, add a mini arcade for the kids next to the food court (more jobs!) and have a nice mall for those who don't want to put the mileage on their feet that you do to travel from one end of Briarwood to the other! I admit, though, I am a little sentimental for Montgomery Wards, the granite whale...even Marshalls!
Halter
Fri, Feb 18, 2011 : 12:50 a.m.
Worst. Traffic flow. Ever. I totally avoid both this and the Whole Foods plaza over there on the east side. Washtenaw is awful in there, you can't make right or left turns out of the properties, and it takes twice as long to anything that you can do elsewhere. Drivers don't obey the Yield signs and cut you off turning into the plaza, and all drivers ignore the Stop signs in the (one) poorly designed exit that allows you to turn east.
Donald
Thu, Feb 17, 2011 : 10:59 p.m.
I haven't shopped at Arborland once since the management stopped allowing the AATA to pull through, and the management of Borders and Hillers know this. I specifically go to Canton for Hillers or downtown for Borders. The parking sucks often because it's not enforced. I've seen people pull across 3 spots, SUVs parked in the small car only spots, and the mall maangement had the gall to tell the AATA "your customers aren't parking in the right spots." It's more frustrating than pleasureable to go there. I'd rather drive and pay for parking in downtown (or take the bus) than go into Arborland
Jay Thomas
Thu, Feb 17, 2011 : 8:46 p.m.
Please, no housing there.
mun
Thu, Feb 17, 2011 : 4:57 p.m.
How about moving the Starbucks, Coldstone, Noodles & Co., etc. into the vacant spaces? Then demolish the mini-mall in front of Arborland and let that be extra parking.
John B.
Thu, Feb 17, 2011 : 6:18 p.m.
That would be demolishing the newest buildings in the development. Not too likely (although I agree that area is stupid...).
Atticus F.
Thu, Feb 17, 2011 : 4:07 p.m.
I agree with jonnya2... The traffic situation is like heaven compared to the parking nightmare at the whole foods down the street.
SonnyDog09
Thu, Feb 17, 2011 : 11:22 p.m.
"Nobody goes there any more. It's too crowded." - Yogi Berra
John B.
Thu, Feb 17, 2011 : 6:21 p.m.
Agreed. I stopped shopping at Whole Paycheck soon after they moved into that silly development. All hail density and parking / traffic flow problems!
johnnya2
Thu, Feb 17, 2011 : 3:14 p.m.
I think the traffic patterns at Arborland are horrible, but the actual lot is far better than the stupidity that is at Whole Foods on Washtenaw. The actual parking spaces are smaller than normal, meaning the Navigator driver is trying to squeeze in a spot that really should hold a Fiesta. I think Arborland would be better served if there was a "back" entrance and exit, that could allow people to go North and maybe build a street that would exit on to Huron River Drive to the north or onto Hogback to the East.
Gloriagirl
Thu, Feb 17, 2011 : 3:13 p.m.
Why not slide down or relocate a few tenants and bring cosco here rather than Pittsfield. Twsp.? The access from a regional level is outstanding next to us 23 and that location serves both the a2 and Ypsilanti market. Someone show contact cosco and let them know it's available.
mpwest
Thu, Feb 17, 2011 : 2:58 p.m.
While it is not good news for the city's tax income, I don't have any sympathy with the ArborLand owners in the least, an out-of -state corporation. Since their action of kicking out the AATA, creating more traffic problems and dangerous conditions for bus riders, I have stopped doing any business there, and certainly have no concern for their fiscal health. Besides, aren't there enough shopping centers already?
zeeba
Thu, Feb 17, 2011 : 2:47 p.m.
The traffic flow is terrible, and the middle of the parking lot is wasted space - no one parks there. They need to work with the city and state to change the traffic flows so the main entrance - easternmost - becomes the exit for traffic heading east. There's no good reason to have an exit for western flowing traffic there - you're just feeding it into a set of traffic lights. Same with traffic coming out of the current exit for traffic heading east - which is on the west side of the property. Whose idea was that?
Anna Mae
Thu, Feb 17, 2011 : 2:42 p.m.
Arborland is difficult to get into from the west and hard to leave going east. If I can, I try to plan my Arborland trip as I am heading west on Washtenaw so I can enter and leave easily. The relocation of the bus stops blocking traffic on Washtenaw has not improved things making traffic much worse along the whole Washtenaw corridor as buses come to stops in the middle of traffic lanes. The parking lot is horribly designed, especially by Starbucks, Cold Stone, & Noodles & Company with a dead end lot which requires you to find a spot or have a problem turning around. There is only a sidewalk from those to Borders. To get to Bed Bath Beyond, Michaels, Toys R Us requires either walking all the way around the shopping center or across the lot. A sidewalk like from Arhaus to DSW would be quite welcome. As a parent of a child, there are a lot of events that are held by Borders, Michaels, Toys R Us, and occasionally PotBelly or Noodles & Company. There are many times we have gone from store to store to hit different events. It would be great if the shopping center had one place to go for them to list events & coordinate with each other. Briarwood Mall has a Facebook & Twitter account to promote the stores. In October, Huron Village had a large Halloween event across many of their stores. It would be great to see Arborland do a shopping center wide event.
nemo
Thu, Feb 17, 2011 : 2:26 p.m.
When Arborland first opened circa 50 years ago, there was a small butcher shop, Steebs(?), we went to frequently even while skipping the other stores — but it brought us there, and we probably shopped more as a result. Hillers is fine, but it's huge, and requires a major commitment of shoe leather and time to shop there, it's more of a weekly than daily stop. So how about a few small retailers who cater to our daily needs, and who we can visit and depart quickly?
Ypsi-Booster
Thu, Feb 17, 2011 : 2:07 p.m.
I agree with the other comments about poor traffic flow: there are three exits for westbound traffic but only one for eastbound. That is a long-standing problem. If I remember correctly, Borders supported having the bus stops on the property, even though it cost them parking (commuters parked in their spaces despite having designated park-and-ride spaces.) We'll miss Borders when they close; the Arborland store was a nice one.
Elizabeth Mount
Thu, Feb 17, 2011 : 1:51 p.m.
This center needs to change it up! I think it would be nice to have things to do there. For me it would be an amazing place to have yoga and fintness classes, indoor family friendly activities, and more local bussiness. An example of arbor land missing out is lady janes hair cuts now down the road. The whole wastenaw corridor could do with some consolidation and improvemnt. It feels like all the businesses are competeing really hard in stead of complimenting each other. Arbor land needs to get serious before the south side corridor leaves them behind. Of course the parking lot situatuion is bad. Hey everybody slow down and give eachother a break! It would also help if you could actully walk arround to the different store more easily.
jmac
Thu, Feb 17, 2011 : 1:20 p.m.
One thing that probably didn't help was the decision of the Arborland owners to stop allowing AATA busses to pick up and drop off inside the perimeters of the shopping center. I agree that the entire traffic/parking situation at Arborland must have been designed by someone who doesn't drive (!) and the busses didn't help much but the busses did bring a lot of students and non-drivers to the shopping center - and that meant more business for store owners. Less people, less shopping, less money, stores close. I am wondering if the Borders on Lohr road is staying open because it is newer and the rent is cheaper than at Arborland??
Are you serious?
Thu, Feb 17, 2011 : 2:18 p.m.
At least now the landlords cannot complain the bus stop would take up too much space. I suspect there will be space for some time. In the meantime the traffic on Washtenaw will continue to be backed up for blocks waiting on the buses, and be dodging people trying to cross the street to change buses.
Angela Smith
Thu, Feb 17, 2011 : 1:01 p.m.
This is a sad and looming realization that, as a local shopper, I too started to come to yesterday. Between the unfriendly bussing decisions, the numerous parking lot difficulties, and the loss of Border's, (a store that draws my family to mosey through the whole plaza and browse on a nice Michigan day), I am worried about the future of this shopping destination.
emu2009
Thu, Feb 17, 2011 : 5:42 p.m.
Let's not forget the TINY parking spots. It is difficult to get in and out of that shopping center. It was poorly thought out.
Angela Smith
Thu, Feb 17, 2011 : 4:10 p.m.
I have found parking is atrocious in the strip near Starbucks, though fiding a spot near the anchor stores is generally no problem . Entering and exiting by car, bike or foot often feels like a hassle at best, or an accident waiting to happen, at worst. Seems there should be a better enrty/exit system, though i am not sure what Washtenaw Ave. would be able to handle...
PattyinYpsi
Thu, Feb 17, 2011 : 1:27 p.m.
Again, "numerous parking lot difficulties?" WHAT difficulties? Maybe you shop there only on pre-holiday Saturdays? Not only have I never had any parking problems in Arborland--I'm always amazed at how easy it is to park there. What am I missing, folks? I have no problems with Arborland at all!
DDOT1962
Thu, Feb 17, 2011 : 12:48 p.m.
From a purely selfish standpoint, I'm sorry to see the Arborland Borders shuttered - it was the nearest bookstore to me. But I'm also curious. If this Borders is profitable, as the article implies, why is it being chosen to close? Are the people providing this insight in a position to know, Paula? It seems out of 500+ stores in this dying empire, there would be plenty of money losers to choose from for closing. Just an outside observation...
John B.
Thu, Feb 17, 2011 : 6:31 p.m.
I have no hard data, but I would guess that Borders looked at the sales and profitability trends for the store, coupled with the proximity to a Barnes & Noble, combined with perhaps other factors that aren't public knowledge, and then made their decision. Plus, if you think about it, it would look really, really bad PR-wise if the downtown store closed, and the Waters Place store is the newest of the three, so that kind of left the Arborland store tilting in the wind, unfortunately. I wish all three could remain open, but even two stores may turn out to be one too many....
Steve Pepple
Thu, Feb 17, 2011 : 12:11 p.m.
A couple of typos have been fixed.
Sarah
Thu, Feb 17, 2011 : 11:42 a.m.
I agree with A2comments. The traffic and layout make it nearly impossible to shop there, especially for those of us who live east of the mall. On the few times, I do try to enter (sometimes, taking the long way to avoid Carpenter/Washtenaw), I feel like I'm taking my life into my own hands. Exiting is nearly as bad. We would drive to the Lohr Road Borders if we needed a book, rather than go to the Arborland one, despite the fact that it was much closer.
Sarah
Thu, Feb 17, 2011 : 8:34 p.m.
Patty, wow. I'm glad you're from Chicago. I'm from Boston. I don't much appreciate your insinuation that I am some sort of country bumpkin who has never seen traffic before. Congrats on your recent move to Michigan. I am glad that you appreciate Arborland! For me, it's just not worth it and I take my dollars elsewhere in town. Yes, my statements were over the top. Turning left into the mall can be tricky when cars from westbound Washtenaw fail to yield. Leaving via that route is also tricky when the cars again don't merge but take two lanes.... one of which I'm driving in, coming towards them. Trying to get home from there, since I live east, is made trickier by the cars who would be in the left most turn lane, trying to merge on to US-23 south. It doesn't seem to matter which left turn lane I'm in, as I always have to stop. Also, doesn't Chicago have a better more useful mass transit system? And, as a result, isn't it more likely that you'd be using that to do your shopping within the city boundries rather than navigating a poorly designed parking lot? Thanks, Barb. These days, there are Starbucks everywhere - even one on Washtenaw/Glencoe Crossing that runs decent hours and has better parking. Additionally, we don't have to deal with the Washtenaw/Carpenter intersection to get there!
Barb
Thu, Feb 17, 2011 : 2:13 p.m.
I think @Sarah's comments were meant to be over the top to express her displeasure. And I agree - that parking lot is the worst designed in town. Even more so than the one at the Washtenaw Whole Foods. I don't go to Arborland anymore unless it's for something I can't get anywhere else. And the section near Starbucks? Completely asinine. Avoid it like the plague (which is more hyperbole to make a point). Fortunately, I do live close to the Lohr Rd. Borders and will continue to shop there.
PattyinYpsi
Thu, Feb 17, 2011 : 1:24 p.m.
Seriously? "Nearly impossible?" "Taking my life into my own hands?" That bad, huh? You know, it's funny. I'm new to the area, and I shop at Arborland all the time. I go to Petco, Hiller's, Michael's, Starbucks, etc., etc. I'm there at least once a week and often more frequently, and I've never found it "nearly impossible" to shop there and never felt I was "taking my life in my hands." In fact, unless you're exiting to go east at rush hour on a weekday, when you'll wait through a light before you get a chance to get onto Washtenaw, I've found it incredibly easy and pleasant to park and shop there. I moved here from Chicago. The city, not the suburbs. Sarah, if Arborland terrifies you that much, don't even think of moving to a major city. You'll die of fright within a month. Arborland is a great place to shop, and I'd like to see more people there!
A2comments
Thu, Feb 17, 2011 : 11:37 a.m.
Typos... Reconize... Then "I" instead of "it". Good article. I think traffic and awful layout detract from it. Awful exit when crowded if you want to exit east. Brighton is so much nicer than any other center in the area, wish it was closer.
Arieswoman
Thu, Feb 17, 2011 : 11:24 a.m.
I go to Arborland to Bed, Bath & Beyond. I just hate that entrance. Westbound traffic just does not stop at the Yield Sign! That entrance was poorly designed. While I am sorry that Borders is closing I did not have all that wonderful shopping experience there. Why pay those high prices for a book when I can get a good deal on a used book via Amazon.com?