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West Oaks Mall finds a new way to do business

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(For the Chronicle/Gary Fountain, March 14, 2014) Entrance to Toby Keith's I Love This Bar & Grill at West Oaks Mall.
(For the Chronicle/Gary Fountain, March 14, 2014) Entrance to Toby Keith's I Love This Bar & Grill at West Oaks Mall.Gary Fountain/Freelance

Technical school students in nursing scrubs head to classes on the second floor of a shuttered JCPenney. The departed retailer's downstairs shell sits empty, an open invitation to a new kind of tenant with a little imagination.

In a flashy honky tonk that just opened across the way, line dancers boot-scoot across a scuffed wood floor to the countrified sounds of an electrified band. Barbecue is on the menu, drinks are poured in red plastic cups and young women in tank tops flit about offering samples of whiskey.

Those not inclined to two-step hold down straight-backed stools along a 95-foot-long bar built in the shape of a guitar. They can watch sports on flat-screen TVs, they can watch the band or they can just sit and watch each other.

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These enterprises at West Oaks Mall are part of a broader effort to cope with social and economic challenges common to retail developers nationwide and unique to those who do business out here, where Westheimer bends toward the southwest and the Westpark Tollway. In this case, developers hope using space in new ways will prevent West Oaks from joining the 15 percent of shopping malls predicted to close in the coming decade.

Its latest owners - there have been several in West Oaks' 30-year history - say they are confident in their new focus, pointing to the opening last fall of a branch of Fortis College, a technical school based in Baltimore, and more recently of Toby Keith's I Love This Bar & Grill. A recent $40 million makeover included the addition of the 14-screen Edwards Theatre in a former Mervyn's space. More restaurants are said to be in the works.

Holding steady

Whether West Oaks will dive, survive or thrive remains to be seen.

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While many traditionally constructed indoor-only malls are booming - local examples include the Galleria and the Baybrook and Memorial City malls - those in the lower and middle ranges will have to reinvent themselves to remain relevant as community gathering spots as Americans continue moving online for their shopping and socialization.

"No one would have opened a technical college in a mall 10 years ago," said Jesse Tron, a spokesman for the International Council of Shopping Centers trade group.

Though the recent recession hurt many major retailers and drove some into bankruptcy, Tron said he remains upbeat about the future of indoor malls even while acknowledging that just two have opened nationwide since 2006.

"People have been saying that malls are dying for 50 years," he said, "but they're actually doing pretty well."

They just can't stand pat.

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'The right direction'

West Oaks Mall opened in 1984 with high hopes and Saks Fifth Avenue as an anchor tenant. It drew shoppers from west Houston and Katy, and plans were in place to build upscale neighborhoods nearby that would further boost the supply of eager consumers.

But with Houston's oil economy in the early stages of a prolonged funk, those real estate plans were scrapped, longtime retail developer Ed Wulfe recalled. Saks called it quits after six years. Lord & Taylor did, too, making way for the Penney's store. Once things picked up, the competition nearby was more intense. Shoppers in Katy found themselves with other options closer by.

West Oaks' location, bounded by the sprawling George Bush Park to its west and a jumble of generic retail along Texas 6, presents other obstacles, although the current owners point out that some 300,000 people live within a 10-minute drive.

"There was a perception that the mall was unsafe before we bought it in 2009," added Gary Karl of Pacific Retail Capital Partners, which bought West Oaks in 2009 for $15 million. "But we researched and found it not to be the case."

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Karl said he believes in the continued viability of indoor malls, as opposed to the outdoor town-center style developments that have become common. That's particularly true in a city with summers as fierce as those in Houston.

But he acknowledged the need to add nontraditional tenants.

Developers may lease the first level of that space to an entertainment venue or fitness facility, said Lance Gilliam, a partner at Waterman Steele Real Estate Advisors and the leasing agent for the mall.

Steve Plenge, managing partner of Pacific Retail, agreed that West Oaks is becoming "more of a hybrid model," with national chain stores sharing space with the likes of Fortis College, which offers classes in IT, the health professions and other fields at 30 schools in 15 states.

"They're probably moving in the right direction," said Jason Baker, principal at Baker Katz, a commercial retail brokerage firm in Houston.

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Mall makeovers

A drive across the Houston area illustrates the plight of many traditional malls and the varying responses to it.

Thriving ones like The Woodlands Mall, the Galleria, Memorial City Mall, First Colony Mall in Sugar Land and Baybrook Mall in Webster are doing more business than ever, said Wulfe, chairman and CEO of Wulfe & Co. These high performers, too, are adapting, Wulfe said, many of them by adding restaurants, which have proved to generate traffic.

Even the Galleria, one of Houston's top tourist attractions, added a restaurant wing in its former Lord & Taylor space a few years ago.

Sharpstown Center, the city's first air-conditioned mall when it opened on the Southwest Freeway in 1961, remains a rework in progress. Long gone are such eminent department store tenants as Foley's and Battelstein's. By 2007, the mall was home to an unusual number of non-national retailers, including independent jewelry outlets that sold jeweled mouthpieces, called grilles, popularized in rap culture.

That mall's makeover as a more Hispanic-oriented PlazAmericas began in 2010. A movie theater opened but lasted just seven months. It added several bridal and quinceaƱera shops and a food court serving mostly Latin American fare. A number of spaces remain empty.

In addition to traditional mall stores like Foot Locker, PlazAmericas still has a number of independent jewelers. Justin Segal, president of mall manager Boxer Property, said the mall draws weekend crowds with a variety of well-attended events, like singing contests. He also cited plans to turn the vacant former Macy's space into a "trade center," with wholesale and retail showrooms.

Northwest Mall now has 60 stores, down from its peak of about 75, manager Viki Guidry said. Gone is a Macy's that was damaged by Hurricane Ike in 2008 and never reopened. The mall also lost some parking spaces to the Loop 610 West widening project.

Northwest also now hosts a technical school campus, the College of Healthcare Professions.

Bold survivors

Green Street Advisors, the real estate research firm that predicted the looming demise of about 15 percent of U.S. malls, said most of the closures will be on the "lower-productivity" and "lower-quality" end.

Green Street also forecast online sales to continue growing at a faster pace than those at brick-and-mortar stores. Still, the firm reported, "most retailers want and need a presence in the mall."

Howard Davidowitz, chairman of Davidowitz & Associates, a national retail consulting and investment banking firm in New York City, sees the situation as more dire. "Tons" of middle- and lower-end malls could disappear nationally, he said, as the department stores that traditionally have anchored malls scale back. Those that survive must be bold.

"Two Florida malls made Costco an anchor - brilliant, because Costco attracts a high-end customer," Davidowitz said.

At West Oaks on a recent weeknight, Amelia Zeiger and her boyfriend, Jake Rockery, were having a beer at Toby Keith's. They moved from Des Moines to Houston a month ago and live near the mall. Zeiger has begun shopping at Macy's and other stores there.

She is attracted by the mall's traditional allure - "You can find anything you need and find multiple options for it" - but her boyfriend prefers shopping online and getting it over with as quickly as possible.

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David Kaplan