Malls across the United States are seeking tenants to fill vacancies created as retailers close stores.
Shoppers will find offices, service businesses and schools amid traditional apparel stores – and, in one Michigan mall, a medical marijuana dispensary.
Now its owner wants to expand by establishing a marijuana growing operation in a closed JC Penney at the Copper Country Mall, just south of Houghton. Township officials will consider the request for the former anchor store in December.
The dispensary – and the possibility of a grow facility in a closed department store – appear to be rare in the U.S., said retail expert Jeff Green.
So far, he said, most mall managers decline legal marijuana dispensaries in shopping centers, Green said, citing a recent conversation with a broker in Colorado. And in Pennsylvania, mall owner Simon Property Group is going to court to keep a medical marijuana dispensary from opening in a former restaurant on an outlot at the former Franklin Mills Mall.
“It is unique to what I’m seeing across the country,” Green said of the dispensary in Houghton.
The Portage Caregiver Center moved into the Copper Country Mall within the past year. It came before the township in fall 2016 when licensed caregiver Tyler Ross and Chris Hoffman spoke at a board meeting, following a conversation with two trustees, according to meeting minutes.
Ross, who’s the registered agent of the company, came back to the township in August, describing to trustees how the JC Penney store could be converted to a grow operation.
“He indicated that it would require about forty individuals to renovate JC Penney site for a grow operation,” according to meeting minutes. Ross did not respond to MLive’s requests for comment.
“(He d)iscussed the “need” for medical marihuana in a community of this size – he indicated that he thought that most of the markets are located down state.”
The request to expand in the mall comes amid an overhaul in Michigan’s medical marijuana licensing regulations and a retail climate creating struggles for shopping centers.
Michigan requires communities to opt in and adopt a local ordinance if they want to allow marijuana facilities under the new licensing system. The situation – which has included a lot of uncertainty over the past few months as the state sets up new parameters – prompted a flurry of requests from the medical marijuana industry.
The Copper Country Mall is located on M-26, about two miles southwest of the Houghton-Hancock Bridge across the Keweenaw Waterway between Portage Lake and Lake Superior.
The mall is about 50 miles south of Michigan’s northern-most community of Copper Harbor. Houghton is home to Michigan Technological University, which adds thousands to its year-round population of about 8,000. Nearby Hancock has about 4,600 residents; the full trade area is about 40,000 people.
The mall was developed in the early 1980s by Developers Diversified Realty, which sold it in 2012. It’s about 250,000 square feet, compared to a typical suburban mall downstate that might be 1 million square feet or more.
Today, it is managed by Moyle, a construction, development and leasing company in Houghton. The company did not return two calls seeking comment.
A post on DeadMalls.com offers some unverified history of the mall: “Overall the mall enjoyed 20 solid years of success with both national and local retailers,” it says. “Trouble arrived in 2002 when Kmart, in bankruptcy, shut its doors. A massive wave of store closings followed.”
Today’s tenants include a veteran center, Department of Health and Human Services, Gogebic Community College, laser tag, a cinema and Dunham’s.
Information wasn’t available on its vacancies, but JC Penney became one of them after the department store announced in March that it would close 138 stores. They were part of what Green calls “the most tumultuous year in … retail in history.”
This year’s thousands of store closings – some to cut costs, some part of bankruptcies – reach into most regional malls in Michigan. They include Macy’s, Sears, Gymboree, The Limited, MC Sports and Wet Seal.
They’re leaving weaker malls in smaller markets particularly vulnerable, Green said.
And while most malls aren’t yet turning to marijuana dispensaries as paying tenants, it’s possible for the future.
“You would see it in distressed malls where the rents are very low,” Green said. “You’re certainly not going to find them in malls like Somerset (in Troy) or Twelve Oaks (in Novi).
“… You’re not going to see them where the malls have a real general appeal and they’re able to lease to more traditional retail.”
That appears to be the central issue at Copper Country Mall, where other retailers – like Walmart – operate nearby.
Bruce Peterson, Portage Township supervisor, said the dispensary is located at the back of the mall, where some of the newer non-retail tenants are finding success.
“Some areas are put to good use,” he said, naming the community college.
Peterson foresees a building that can re-grow its relevance though its mix of tenants, possibly through more remodeling that adds exterior doors to the traditional mall configuration.
“It has potential,” he said. “Hopefully, in the future, more businesses will locate there.”
Unclear, though, is whether a marijuana growing facility will be one of them. The township board will weigh the proposal during a board meeting on December 11.
“The pivotal issue is the number of people serviced by this facility,” said Peterson.
Peterson said Portage Township received an additional few requests from medical marijuana providers ahead of the state’s new licensing regulation, but has so far decided not to opt in. Unclear, he said, is what that will mean for the dispensary in the mall.
And the board is willing to hear more about what the plans could be for the JC Penney store and how it could fit into the township and benefit area residents who use medical marijuana.
“(Ross) could come to the board on the 11th and say, ‘My clients are in need of this,’ and give us some ideas on scope and need on having a facility in the township.”
Source: 420 Intel – United States