Mall madness?

By Dan Daly, Journal staff | Monday, January 22, 2007

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RAPID CITY — Dirt work is set to start later this week on the Rushmore Crossing shopping center project, the Cincinnati-based developer said Friday. It’s the first of three Interstate 90 retail projects to break ground.

The other two are in various stages of pre-development. All are huge. Combined, these proposals would add 2 million square feet of new retail space — two Rushmore Malls, give or take a big box or two.

It’s hard to believe all of these projects are being proposed in a metropolitan area with just 89,000 souls.

In fact, Rapid City’s retail trade area stretches far beyond the Black Hills, according to market watchers. Shoppers come here from Gillette, Wyo., Chadron, Neb., Dickinson, N.D., and everywhere in between. In 2006, shoppers in Rapid City spent $1.94 billion, according to state sales tax figures.

In addition, Rapid City sees an estimated 3 million tourists a year, probably a lot more, Jim McKeon, head of the Rapid City Area Chamber of Commerce, said. And with events such as the Black Hills Stock Show & Rodeo, this market is catching the keen attention of national retail chains.

“They are realizing that we are apparently undersold as far as retail goes,” McKeon said. If the three recently announced projects are actually built, the city will hardly be undersold.

For those of you following along at home, here are the players:

n The Meadows of Black Hills would cover nearly 1 million square feet along the north edge of Interstate 90 between the same exits. RH Johnson Co. and its partner, Lane4 Property Group, both of Kansas City, Mo., are the developers. They claim to have commitments from Home Depot, Bed, Bath & Beyond and Sam’s Club.

n The newcomer, Foursquare Properties of California, confirmed recently that it has an unnamed project in the works somewhere east of Exit 61. The company hasn’t said what stores are going in, but it does have development ties with Nebraska outdoor retailer Cabela’s.

n Rushmore Crossing, where dirt work is scheduled to start next week, would run along the southern edge of Interstate 90. Midland Atlantic Properties, based in Cincinnati, is developing this project. The proposal will cover 900,000 square feet of retail space, according to Midland Atlantic’s John Silverman.

The first half is scheduled to open in the fall of 2008, Silverman said. The second part would open in spring 2009. Silverman refuses to publicly name specific tenants.

“Unless our tenants tell us to announce their names, we will not do that,” he said. “I will tell you that the leasing is going extremely well.”

However, Midland Atlantic has been privately naming a lot of names. The company has apparently been circulating a list of “proposed tenants.”

A copy of the list, obtained by the Journal, shows a Rushmore Crossing with a long list of well-known national retailers, including a Dillard’s department store, a Barnes & Noble bookstore, a PETCO, a TJ Maxx and a Party America store.

It’s hard to figure out what to make of the tenant list. Attempts to confirm some of the names on the list were unsuccessful. Julie Bull, a spokeswoman for Dillard’s, said she is unable to confirm whether there are any plans for a Rapid City store. Spokeswomen for TJ Maxx and PETCO both said Friday that they have no plans for stores in Rapid City.

And Party America already has a Rapid City store. Jack Wellman, the Party America franchisee, said Thursday that he has been approached by the developers, and he has talked to the developers. However, he has made no commitment to move to Rushmore Crossing. And at this time, he has no plans to move.

Two other names on the list, Target and Old Navy, are currently tenants of Rushmore Mall. Is Rushmore Crossing attempting a raid on its neighbor?

Rushmore Mall general manager Karen Waltman declined to comment on the specific plans of other developers. However, she said parent company Macerich Co. welcomes competition. More stores strengthen Rapid City’s position as a regional shopping hub, she said, and that’s good for Rushmore Mall.

“We really welcome the additional retail entering the Rapid City market and the Black Hills community. All these developments are indicative of the growth in the community, so it generates a really healthy market share for all retail outlets because it brings focus to our area,” she said. “And that’s a very good thing.”

Waltman said the 834,000-square-foot Rushmore Mall, in its 30 years in business, has helped make Rapid City the regional retail hub that it is. “We really helped spawn and develop business growth for some time, and we want to continue to focus on doing what we do best,” she said.

The mall opened in 1978. At the time, the Ramkota Hotel (then Howard Johnson) was about the only business north of Interstate 90. In fact, there wasn’t much south of the interstate, either. It has blossomed into a thriving commercial corridor with a strong mix of local and national retailers. “All of that complements each other,” Waltman said.

The Chamber’s McKeon said it can be hard for existing merchants to stomach big new competitors coming into the market, but the chamber holds to its pro-growth stance. When the home improvement big-box stores came to town a few years ago, he noted, local hardware stores survived.

McKeon agrees that Rapid City might be reaching some type of “critical mass” with retail development. With more stores, Rapid City attracts shoppers from farther away. More shoppers bring more stores, and more stores bring more shoppers. “It would seem that a rising tide lifts all boats,” McKeon said.

According to sales tax figures, the tide in Rapid City is indeed rising — but its rate of growth in taxable sales — 46 percent in 10 years — has been slower than Sioux Falls’ 65 percent, or even the statewide average of 54 percent.

Last year, was Rapid City’s first down year in a decade. Taxable sales here fell nearly 1 percent.

Contact Dan Daly at 394-8421 or dan.daly@rapidcityjournal.com