Medina officials are working with property owners to keep a plaza on North Court Street thriving after Super Kmart closed two years ago and now Old Navy has decided to leave.
Mayor Dennis Hanwell said his economic development office is working with the owners to find a tenant for the 160,000-square-foot space Kmart once occupied.
Kmart closed at 1105 N. Court St. in 2012, and a large empty parking lot sits in front of the former big-box store, although shoppers still frequent smaller stores on both sides of the lot.
But leaders aren’t sure how long the smaller businesses will thrive with an empty lot separating them.
On Tuesday, The Gazette confirmed Old Navy, north of the former Kmart, would close its doors today.
Though the Kmart closed two years ago, the company continues to pay the owner on a 30-year lease that has more than six years remaining on it. With the property owner still collecting a check for the vacant property, city officials said finding a tenant could take a little while.
“I would say the rent is slightly above average-market rate,” Medina Economic Development Director Kimberly Rice said. “That makes it difficult.”
The mayor said the owner of the former Kmart site, Benderson Development Co. in Buffalo, N.Y., would need someone willing to lease the 160,000-square-foot space — a challenge that limits the pool of perspective tenants.
“They have to find a tenant who can take over all that space and beat the current lease payment,” Hanwell said.
The lack of a major tenant could make it difficult to keep the rest of the plaza filled, he said.
The remaining plaza storefronts surrounding the empty store — including Marc’s, Sally Beauty Supply and Marshall’s — are owned by New York City-based Surrey Equities, a real estate investment and management firm.
Hanwell said he talked with Surrey Equities President Ed Silvera this week after news broke about Old Navy closing its Medina store.
“(Silvera) said the Old Navy is closing because they’re at the end of their lease and simply decided not to renew it,” Hanwell said.
Old Navy decided to put its local resources into nearby stores with better sales records, he said.
“From a business standpoint, if they make a determination they want to put their resources in Strongsville and Fairlawn because their profits are stronger than ours, there’s very little we can do,” the mayor said.
Messages seeking comment from Surrey Equities and Benderson Development Co. were not returned Thursday.
Complicating matters for Silvera’s plaza is a clause in his lease agreements that allows tenants to pay a lower lease rate or vacate their lease if the “anchor tenant” — Kmart — were to leave, Hanwell said. While that’s not the case with Old Navy, it could become difficult in the future as Silvera works to keep tenants.
“He’s having to suffer through maintaining a complex under these conditions,” Hanwell said.
Development officials agreed that the situation at the plaza is not ideal. When Silvera’s company bought the properties surrounding Kmart in 2007, the store showed no indication of closing and had more than 10 years remaining on its lease agreement.
“I’m sure when he decided to buy everything, he never imagined that Kmart would leave during the term of their lease,” Rice said. “If you look at a shopping mall who loses their large anchor tenants, you see the small tenants struggle with less foot traffic to the area. It’s the same with this plaza.”
Rice said her office has reached out to both property owners and they have been responsive to working with community leaders to find and keep tenants. She said the former Kmart space has attracted interest from home improvement stores like Lowe’s and Menards.
Menards still may be considering the site, she said.
“We can reach out to them, and tell them how great Medina is, but in the end it’s the market that drives whether a retailer will come here,” she said. “They look at population and market saturation and that’s how they make their decision.”
Still, Rice remains optimistic that a new store or possibly multiple stores could occupy the former Kmart space and revive the plaza.
“These kinds of deals take time to work through,” she said. “You have to find an interested party that wants to take on this lease.
“We have to be patient, which is difficult.”
Contact reporter Loren Genson at (330) 721-4063 or firstname.lastname@example.org.