A California-based company plans to reimagine the long-vacant Carson's department store at Southlake Mall in Hobart.

Cubework, a company that specializes in flexible workspaces, built-to-suit office spaces and industrial warehousing, acquired the two-story, 144,122-square-foot department store that's been vacant since Carson's went out of business in 2018. It plans to transform the former department store into a pop-up retail space, a co-working mall and indoor sports and events venue.

Businesses can rent kiosks and pop-up shops to test the market for their goods and services. Cubework will rent kiosks for as little as $590 a month as well as fully furnished pop-up spaces where entrepreneurs can place their products on already installed shelves. It's offering short-term leases in a high-traffic retail space as well as warehouse units ranging from 200 square feet to 10,000 square feet.

It's marketing the Cubework Shops at Southlake as "an open air enclosed creative space specifically designed to get your business out of your garage, self-storage facility, or home office."

Amenities include Wi-Fi, utilities, janitorial service, community managers, security cameras, pallet jacks, loading docks and freight elevators. Cubework envisions it as a space for pop-up shops, startups, beauty and wellness, sports and entertainment, cloud kitchens, event spaces, maker spaces, creative spaces, nonprofits, e-commerce, fulfillment, co-working spaces, parties and conference rooms.

Cubework also is building out a co-working mall in the two-story space that's been empty for the last four years. It suggests business owners could transform suites into indoor sports venues like "indoor kids' gym, Pilates/yoga studios, CrossFit, e-sports such as airsoft, laser tag, escape rooms, gaming lounges, batting cages, virtual golf, indoor pickleball fields, and much more."

Cubework hopes to open the move-in-ready spaces as soon as Nov. 15.

"I think this is a sign of things to come as malls all across the United States are being redeveloped," said Aaron McDermott, president and co-founder of Latitude Commercial, one of Northwest Indiana's learning commercial real estate firms. "A lot of the outdated centers are being converted into things like apartments, hotels and creative offices. Because the pandemic accelerated the direct-to-consumer approach to business we are going to see more and more big boxes either right-size their footprint, convert more space to online pick-up, or close altogether."

A correction was overdue in the retail space, he said.

"The United States was overbuilt prior to the pandemic with retail anyway so a lot of professionals had anticipated it would need correcting," McDermott said. "At one point the United States overall was more than triple the amount of retail space per person than Canada the second largest per person. With consumer behavior making that dramatic change to online purchasing the bricks and mortar retail business was due to downsize."

The Carson's space definitely needed to be repurposed in the current retail climate when many shoppers now just order whatever they need online, McDermott said.

"Southlake Mall still has some very significant issues as the mall itself still shows signs of high vacancy," McDermott said. "However, it is still located in the heart of Northwest Indiana so someone will find a viable use for the site. At one point the City of Hobart looked at turning one of the boxes into a convention center. I thought that was a great idea as the cost savings of repurposing the mall would cost far less than building a brand-new center."

It's a good sign that developers are willing to invest in the Southlake Mall at a time when malls are closing nationally, including downstate, said Micah Pollak, associate professor of economics at Indiana University Northwest.

"Being able to find investors, especially for less traditional uses of the available space, is crucial for the survival of the Southlake Mall," he said. "This is a good sign for the mall, but not a complete answer to all of the challenges the mall faces."

It marks a new era for the Southlake Mall, the two-story, 1.3-million-square-foot enclosed mall then-Cleveland Guardians owner Richard E. Jacobs developed in the early 1970s.

"Once converted, it is unlikely we will see this location returned to a traditional department store," Pollak said. "In the event significant demand for a traditional retail store returns, there are other vacant spaces that would be better suited and used first. I think it’s likely we have reached the end of the era of traditional retail anchor institutions at indoor malls."

The department stores that have traditionally anchored enclosed shopping malls have been fading from the landscape amid a string of bankruptcies in recent years.

"A traditional department store faces competition from multiple sources, including: (1) competition from online stores, which can offer a better selection, (2) competition from discount superstores, which can offer a better price and (3) competition from smaller boutique stores, which can offer higher quality and more unique or niche products," Pollak said. "Traditional department stores have struggled to compete simultaneously on all three fronts and in the future the most successful will shift their business models to pick a single front on which to compete more aggressively."

After e-commerce became ubiquitous, the brick-and-mortar retail landscape forever changed.

"As the line between online and in-person retail shopping becomes more blurred, the retail industry has become more centralized in some aspects, with Amazon capturing a dominant share of online sales and retailers like Target, Best Buy and Walmart consolidating market power in combined online/in-person shopping," Pollack said. "However, this consolidation has also created gaps and new market opportunities. Smaller niche and boutique stores have the ability to compete and grow both online with the ubiquities of e-commerce options, and in-person with a scalable rental storefront and warehouse options, like those provided by the Cubework location in the Southlake Mall."

Redevelopment projects like the one Cubework is pursuing at the former Carson's at Southlake may be the future of shopping malls around the country. The old way of doing business is no longer viable.

"Malls generally operate on an Anchor Tenant model, where a small number of large anchor stores draw in customers to increase the exposure for smaller satellite stores. It is likely this model will continue to be the best solution for malls, however, the nature of the anchor and satellite stores is expanding to emphasize non-retail," Pollak said. "For example, instead of a retail store, the anchor for a mall may become an office space, art or entertainment venue, a library branch, gym, or something else. Likewise, we will see satellite stores expand into non-retail areas, such as smaller pop-up stores, co-working or art spaces."

Adaptation is key to survival, he said.

"For malls like Southlake, which are in good condition and located in a well-populated and strong commercial area, I think there is a strong future, provided they find flexible ways to adapt and operate," Pollak said. "Embracing less traditional uses of mall space like what the Cubework location brings to the Southlake Mall will be an important as a path forward."
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