The new Ashley HomeStore is among a core of new, bright spots along Humes Road, one of several strip mall spaces that were once defunct, yet in the past few years have been revived by developers and niche retailers.
Inside, the furniture store is a contemporary showplace, a huge conglomerate of curated living room and bedroom sets between walls of earth tone, all under minimalist lighting that hangs from the white ceiling. Sales staff pace the floor with clipboards.
And … there are customers.
Then there’s the defunct, 100,000-square-foot building to the west, right next door. The former Shopko.
The building officially is joining the ranks of more than 200,000 square feet of vacant, defunct retail spaces that over the past few years have sat idle along Janesville’s chain retail corridor along Milton Avenue and Humes Road.
The dark stores include the former Sears store at the Janesville Mall and Toys R Us. In a new national retail landscape, former stalwarts of consumerism such as Sears have faltered into corporate restructuring while owners of huge category killers such as Toys R Us have crumbled under their own weight into bankruptcy liquidation.
In Janesville, the Sears and Toys R Us properties were owned by the retail companies themselves. When the companies shuttered the stores, the properties moved through a sometimes protracted maze of federal corporate bankruptcy machinations, shuffling of ownership, and ultimately, as liquidators in the retail world like to say, “disposition.” That’s real estate-ese for “unloading unused, unneeded property.”
City of Janesville Economic Development Director Gale Price said such properties aren’t without tire-kickers interested in future prospects, but a property tied up in an out-of-town bankruptcy dealing presents a waiting game for those with a local economic development stake.
“The process has to weed itself out and, yeah, that’s always frustrating because it’s usually never fast,” Price said.
And it’s a lot of space—more than 4.5 acres—and that’s not counting parking lots, berms, terraces and easements. Price called that much raw retail floor space inventory “unusual.”
“Those are big, big spaces to have open and available out there on the market. You know, and it’s all at once. It’s part of the nature of the beast in the retail world right now, I guess,” Price said. “But there’s a path forward, which is good. That’s what you want to see.”
It took several months, but the needle has moved on the 80,000-square-foot former Sears store. The Janesville Mall’s new owner, RockStep Capital, bought the Sears store and its standalone auto center and assumed ownership of it early this summer, mall manager Julie Cubbage said. The property is now bundled into the acres of vacant space, including the former JC Penney and Boston Store spaces that are now owned by the mall and being offered as property available for some kind of reuse.
Cubbage said the mall has seen prospects for reuse for its vacancy, even a tentative agreement on the remnant former JC Penney space, but she said the JC Penney deal is “on hold” as the mall pursues a bid with the city as a possible location for the future home of an ice arena and sports complex.
Cubbage said that some vacant department store spaces open at the mall are a better fit than others for an indoor sports complex. But Cubbage said some prospects for reuse of the former Sears, Boston Store and JC Penney spaces right now hinge on the city’s decision later this fall on where it would site a sports complex—and whether the ultimate location could be the mall.
Meanwhile, the former Toys R Us space, a 30,000-square-foot “mid-box” store on Milton Avenue finally cleared some corporate bankruptcy hurdles and went on the market this spring. It’s for sale (or lease), according to listings by Mid America Real Estate.
Mid-America agents handling Janesville’s former Toys R Us didn’t respond to Gazette inquiries. But in a blog post earlier this year, the company wrote that people shouldn’t immediately consider the monolithic, tombstone look of a shuttered Toys R Us store as a sign of retail doom.
“The news of these brands vacating space suggests opportunity and dollar signs$$$” for newer-age retailers such as bargain mattress sellers, casual clothing and consignment clothing chains, casual restaurant chains, and “As-Seen-on-TV” retailers, Mid America wrote.
Whatever the case, the former Toys R Us in Janesville is now being advertised as the fall location of a Halloween pop-up store—the same Halloween store that for years was a seasonal tenant at the strip mall space that now houses the new Ashley HomeStore.
The new Ashley HomeStore’s manager, Jessica Thorson, said she sees irony in the Halloween store’s change in venue.
There’s also a twist of irony in Thorson’s ringside seat next to the failed Shopko. Until a few months ago, Thorson was an employee at Shopko’s Fort Atkinson store. That store, like the Janesville location, was one of a handful of stores that Shopko tried to keep open as it clung to a failed bid to find investors that would rescue the underwater bargain retailer from Chapter 11 bankruptcy.
As of this month, the Janesville former Shopko now stands hollowed out, its inventory fully liquidated, vacant inside except for the Shopko Optical—the only remaining vestige of business that has survived Shopko’s failed bid out of corporate bankruptcy earlier this year. The eye care center continues to trundle along, although to get there customers must walk down a long aisle partitioned with a white plastic tarp that blocks the acres of dead-store space surrounding it.
Private investment firm Monarch Alternative Capital now owns all of the former Shopko properties. A firm it’s partnering with, New York firm Raider Hill Advisors, is overseeing “all leasing, redevelopment, asset management, and disposition activities for the national portfolio of (former Shopko) retail properties totaling 5.5 million square feet across 14 states,” Raider Hill wrote.
Brian Zabell, executive vice president of Raider Hill, told The Gazette his company doesn’t comment to the media on its real estate dealings. He declined to give clues as to the Janesville property’s future.
In an online prospectus, Raider Hill disclosed that the former Shopko properties in Green Bay, Stevens Point and Belvidere, Illinois, are located in economic “opportunity zones”—locations that would allow special, federal tax incentives for redevelopment. In Janesville, Shopko is located on the cusp of a city tax-increment financing district the city established in 2017 to aid redevelopment of the blighted, former Menards Property off North Pontiac Drive.
The same owner who worked with the city to turning the former Menard’s property into a multi-store retail center also owns the strip mall located next to Shopko—the property that now houses Ashley HomeStore. Price said that owner was able to redevelop and land leases with retailers in the strip mall without the use of city tax incentives.
A Shopko Optical store manager told The Gazette that this fall the eye care center will move out of the building and into another location farther west on Humes Road.
Thorson said Ashley HomeStore is aware of that plan.
“I’d like to think that means the building would go on the market this fall,” Thorson said.
What apparently is not happening—and it’s a rumor that Cubbage said the Janesville Mall has tried to address on its social media pages—is that Kohl’s plans to leave the mall and move into the former Shopko.
“That rumor is false. Why would Kohl’s move from a location in Janesville that customers recognize, where they do lots of volume, and not to mention where they have extra (warehousing) capacity? Why would they move down the street into a 40-year-old standalone store that an owner would have to pay to completely renovate and convert?” Cubbage said. “That makes no sense.”