Country Club Plaza confronted with dozens of vacant shops: 'A long way from what it used to be'
The Plaza has been losing tenants at about the same rate it signs new ones. Whoever purchases the shopping district may have to invest at least $100 million in infrastructure and building upgrades to bring the area back to its “jewel of Kansas City” reputation.
For years, many Kansas Citians longed for the iconic Country Club Plaza, which had been owned by North Carolina-based Highwoods Properties Inc. since 1998, to return to local ownership.
But a powerhouse partnership between two big shopping center names – Taubman Centers and the Macerich Co. — blew into town in 2016, shelling out a whopping $660 million for Kansas City’s “crown jewel.”
The new owners promised deep pockets, proven track records and unrivaled connections to top retailers.
Their plans for the Plaza called for a mix of locally owned shops, sought-after national retailers fresh to Kansas City and hot new concepts that would draw customers from neighboring states.
Seven years later, Taubman and Macerich defaulted on a $295 million loan and have reportedly agreed to sell the Plaza at a fire sale price.
So, what happened?
Taubman and Macerich started strong with a stream of new restaurants and retail openings.
Hogshead had a menu that included braised short ribs and foie gras “Snickers” bars. Parkway: Social Kitchen, a classic American grill, opened with a view of Brush Creek and a basement lounge featuring live music. And Rye in Leawood, which had been in talks with Highwoods to open a restaurant, reached a deal with Taubman and Macerich.
Apple moved to a larger corner location in the redeveloped Halls building. Nike took the other corner with a “curated product mix.” San Francisco-based Marine Layer went in between the two chains, selling its “absurdly soft” T-shirts and other apparel.
New York cult favorite Shake Shack, described as a modern-day roadside burger stand, also opened to great fanfare on bustling 47th Street.
Then, in what promised to be one of the area’s biggest retail reshufflings, Taubman and Macerich said they were wooing Nordstrom away from the Plaza’s longtime suburban retail rival, Overland Park’s Oak Park Mall.
Taubman and Macerich demolished buildings on the west end of the Plaza to make way for a new 116,000-square-foot store — an anchor tenant that would be visible nearly from the other end of the Plaza along Nichols Road. Later plans called for an even larger store with a cafe.
Made in KC Marketplace, which sells locally made products, opened on the Plaza in 2018 and then expanded in 2021 to not only add more vendors, but to accommodate its growing crowds on weekends.
“The Plaza is the busiest place for retail in terms of shoppers and tourists,” said Tyler Enders, partner in Made in KC, which has 11 locations across the metro. “I want people to come and walk around and not come for a single destination.”
More recently, the Plaza’s owners snagged several first-to-market tenants such as Capital One Café, Parachute and Psycho Bunny. The Escape Game — where groups try to find clues and solve puzzles to escape rooms before time runs out — also added much-needed entertainment.
The Plaza also signed more small fitness studios, boosting foot traffic that could spill over to other tenants.
During the pandemic, locally owned jewelry and accessories shop, EB and Co., tried out a spot at a reduced rate. The store was so successful that owner Emily Bordner signed a 10-year lease.
Jessica Harris and her mother, Regina Antunes, started selling their handcrafted Brazilian truffles online in 2015. When they were ready for a Sweet Kiss Brigadeiro storefront, the Plaza was their top pick.
They did a holiday pop-up in 2021, then signed a one-year lease, then another one-year lease for a larger space on 47th Street.
“When we first moved here from Brazil, we would go all the time. It was a special place,” Harris said. “There’s nothing else like it here. Lots of people come from out of town. But we need to get locals excited about the Plaza again, so they wake up in the morning and say, ‘Let’s go!’ ”
Still, the Plaza has been losing tenants at about the same rate it signs new ones.
A Plaza spokesperson declined to comment for this story. But the shopping district currently has about two dozen empty spots. That doesn’t include the would-be Nordstrom site.
Nordstrom pushed its opening back a couple of times, then said it wasn’t moving. The Plaza called it a mutual decision, but a Nordstrom spokesperson indicated the deal was dropped at the developer’s request.
Sister stores, Victoria’s Secret and Pink, also are dark, along with the decades-old Helzberg Diamonds space.
Several once-vibrant restaurant locations now are empty: the aforementioned Hogshead and Parkway: Social Kitchen, along with mainstays Houston’s and Fred P. Ott’s. One has turned into a perennial holiday-themed bar as it waits for a long-term tenant.
Moosejaw and Soft Surroundings are scheduled to close in early 2024.
To be sure, the COVID-19 lockdowns, combined with surging online shopping, contributed to some closings.
“The goal of my life was to have a restaurant on the Plaza,” said Colby Garrelts, who opened the Rye Plaza restaurant with his wife, Megan, in 2016. “But when I was young the shops were full. It is a long way from what it used to be.”
Given the opportunity, some local real estate experts said they would have done a few things differently in recent years.
In late 2018, the Classic Cup Café shut down dinner service, saying most of its business was daytime. But its dining room boasts floor-to-ceiling windows along high-traffic 47th street and it has a popular sidewalk patio in front and in back — both huge draws during warm weather.
Its early closure left a lifeless stretch during many evenings on a keystone block on the Plaza.
“We do private events upstairs and downstairs, three to four nights a week. So, it is more lucrative to staff the restaurant during those times, and I think the Plaza is making more money from us on that sort of business model,” said Dan McCall, owner. “Do I go with people who might be coming in or do I stay with guaranteed money that I make when I book events?”
Sterling Bank replaced the beloved Zoom toy store, which drew locals and tourists alike. And when eyewear chain LensCrafters opened across from upscale jewelry store Tivol, some Plaza fans complained that it was turning into a just another mall.
While some tenants got short-term leases at reduced rates during the pandemic, that irked some long-term tenants who didn’t get similar breaks.
“They need to fill up these empty spaces with strong draws,” said one business owner who declined to comment on the record, saying they thought their lease prohibited it. “The new owners need to lower the rent so we can prosper. I’m paying Park Avenue rents, but I might as well be in Grandview.”
The Plaza area sometimes attracts hot concepts. Often, though, they are in projects just outside of the historic shopping district.
Puttery mini golf and restaurant, as well as a Kansas City Chiefs-themed fitness center called Chiefs Fit, are in the redeveloped Jack Henry building across 47th Street from the Plaza. It is owned by another investment group – partners Matt Pennington, an Overland Park-based developer, along with Jim Klausman and Butch Eaton of Topeka.
They spent $21 million to buy the Jack Henry building, and another $30 million to redevelop it. Higher ceilings are the latest trend, especially with restaurants, so the group excavated four feet in the basement to give Puttery its soaring 12-foot ceilings.
“It’s pretty simple. We have an enormous amount of money in Jack Henry – from the utility lines down to the bones of the building. Everything is new other than the concrete pillars,” Pennington said.
“The question is how much is the city, and potentially the state, willing to invest in this jewel? The (current owners of the Plaza) bought a 100-year-old asset that needed $200- to $250 million investment. Everything is old and crumbling. Hopefully, it right sizes itself.”
The owners of Highland Park Village in Dallas, which includes members of the extended Hunt family, are said to be negotiating to buy the Plaza at a steeply discounted price.
Plaza tenants are getting their wish lists ready.
The lack of security is a top concern. Many want to see more police or security walking the beat, riding golf carts or stationed on corners, perhaps even a police substation.
Some aren’t waiting on the Plaza to beef up security.
On a recent Saturday, the Nike and Apple stores had police officers stationed at their front doors, while Psycho Bunny had security standing in front. One tenant had a “no guns allowed” sign on its storefront.
Current tenants also cite infrastructure issues with streets often blocked off for repairs, most recently a couple of lanes at 47th Street and Pennsylvania Avenue for new electrical lines. Crumbling sidewalks and parking lots need upgrading, and one restaurateur said, “The plumbing is horrible.”
As for the two dozen empty spaces, that’s “untapped potential,” said Enders of Made in KC.
“I would love to see a distillery, another barbecue and a cocktail lounge, jazz band,” he said. “It could transform the Plaza.”
Also on the wish list of tenants and customers: More locally owned restaurants and retail, a small grocery store, and events such as a farmers market to lure locals with a green space where they could linger.
Some would like to see more upscale retailers like those in Highland Park Village. During the pandemic, Louis Vuitton was said to be looking at a Plaza site near sister retailer Tiffany & Co.
Dealing with one owner instead of a partnership also could ease negotiations. Sources said one Plaza partner wanted a Dillard’s for the now-dormant Nordstrom site, while the other wanted a Target with apartments above.
But local real estate experts said it will be necessary for any new owners to “buy” tenants.
“They will need a big piggy bank for tenant improvements,” said David M. Block, located in the Skelly Building next to the Plaza.
New owners may have to invest a minimum of $100 million in infrastructure and building upgrades to bring the Plaza back to its “jewel of Kansas City” reputation.
Legacy Development, which had offices on the Plaza, ended up in court when the Plaza sued them for back rent. Legacy said it withheld rent because of a mold issue. The lawsuit has since been settled in the Plaza’s favor and Legacy moved.
“The premium price Macerich/Taubman paid for the property put a lot of pressure on maximizing rents and limiting services,” said Dave Claflin, vice president of development for Legacy. “There just wasn’t enough margin to make long-term decisions. New owners may be just the reboot needed.”