Codding plans more active role at Coddingtown after merchant departures, complaints about partner Simon

KEVIN MCCALLUM
THE PRESS DEMOCRAT

After several years letting its partner take the lead at Coddingtown Mall, local development firm Codding Enterprises is stepping back into a more active role at the struggling center.

Officials at the Rohnert Park-based company, whose founder Hugh Codding developed the 1960s-era mall, are trying to increase communication with retailers and improve coordination with partner Simon Property Group.

The changes follow a rash of store departures from the aging shopping center and delays in long-promised renovations, setbacks that have remaining merchants worried about the center's future.

Lois Codding, the 33-year-old granddaughter of Hugh Codding, said she has recently gotten more involved in efforts to revitalize the center after witnessing longtime tenants depart and hearing a litany of complaints from the merchants who remained.

"After all, it's our name attached to it," said Codding, vice president of leasing at Codding Enterprises.

In an effort to stem the exodus of local merchants from the center, Codding said she is trying to help resolve conflicts, open lines of communication with Simon and clarify each partner's respective roles at the mall.

"We're trying to make it more of a partnership that works together," Codding said. "Because we're connected locally and they're connected nationally, and you need the two forces to make it successful."

While subtle, the recent reengagement by Codding Enterprises highlights something Coddingtown merchants have long suspected -- that the partnership between Codding and Simon hasn't always been a smooth one.

The sweeping redevelopment of the mall envisioned when the partnership was formed in 2005 has yet to materialize. Some local merchants are disillusioned by the delays. And communication between the two partners has been spotty.

"I think it was a serious miscalculation for Codding to ever get in bed with Simon," said Arnie Feldsher, longtime owner of the Earthworks jewelry store, which closed early this year.

Simon owns the city's other main mall, Santa Rosa Plaza, which competes with Coddingtown for shoppers and merchants. Feldsher thinks Simon might not be highly motivated to help Coddingtown thrive because it owns the rival downtown mall.

"You don't partner up with your chief competitor," Feldsher said. "They have no incentive to make you successful. You partner up with your chief competitor's strongest competition."

Back in 2005, Codding Enterprises, under the leadership of new chief executive officer Brad Baker, was trying to find a way to finance a major facelift for Coddingtown, the company's largest asset.

The 800,000-square-foot mall had struggled for years to attract new national tenants and shake its image as a dated shopping destination. After entertaining offers from three of the world's largest mall developers, Codding Enterprises sold a 50-percent stake in Coddingtown to Simon Property Group.

The Indianapolis-based company is the largest mall owner in the nation, with an ownership interest in 386 properties on three continents. In addition to Santa Rosa Plaza, it also owns the Petaluma Village Premium Outlets.

The $37 million transaction put Simon in charge of the day-to-day operations of the mall. It also split the leasing responsibilities between the two partners, with Simon primarily responsible for attracting national tenants.

"We looked at them as the savior," Lois Codding recalled. "They were taking the lead, and we let them."

But four years later, the redevelopment remains in its infancy. The recession, credit crunch and most challenging retail climate in memory have made attracting new major tenants a significant challenge.

The only major new lease signed since the partnership was formed is Whole Foods Market, which has yet to move forward with its part of the project, citing the slow economy. Codding Construction completed the $7 million building shell last fall, but Whole Foods doesn't expect to occupy it until 2010.

The delay by the organic grocer spooked many local merchants, many of whom worried it might not open at all. Whole Foods officials have since said the company is committed to the project.

Nevertheless, about a half-dozen stores -- including longtime tenants Toys West and Earthworks -- left or announced plans to leave around the end of the year. The departures left behind more than a dozen empty storefronts, which serve as a constant reminder of the center's challenges.

Another longtime merchant, The Classic Duck, has also announced its departure, and bankrupt department store Gottschalks is closing by July 15.

After Whole Foods announced its delay in the fall, Lois Codding says she realized someone from Codding Enterprises needed to get more involved in the mall.

"When the economy tanked we went, 'OK. Our local tenants are crying. Let's go in and see if there's anything else we can do,'" she said.

Tenants were complaining not just that business was slow, but that dealing with Simon was a wrenching change from the way Hugh Codding managed the mall.

Feldsher, who blames Simon for preventing him from selling his jewelry business to two employees, said dealing with Simon officials over the transaction was a frustrating ordeal he won't soon forget.

"They're just a faceless, cold corporation that plays hardball 100 percent of the time," Feldsher said. "At least with Codding (Enterprises), they may have been jerks, but they were human jerks."

Plenty of other local merchants have chaffed at Simon's management style.

David Astobiza, owner of Sole Desire shoe stores, said Simon treats independent merchants at Coddingtown particularly poorly. It has raised fees unexpectedly, reduced the mall's services and staffing, and refused to explain decisions, Astobiza said.

"With Simon, you're not a person. You're just a number on a computer screen," Astobiza said. "They have no experience with independent merchants."

Lois Codding acknowledged that Simon can be difficult for some people to work with because it is so large and compartmentalized. Even Codding Enterprises has at times struggled to communicate well with its partner, she said.

For example, in the redevelopment rush, the lines of communication got crossed over who was responsible for different leases, she said.

Simon officials, largely because they were already talking to tenants about relocating them within the mall as part of the redevelopment, also began lease negotiations with tenants who were supposed to be Codding Enterprises' responsibility, she said.

"I feel like Codding has dropped the ball a little bit, too," she said.

Les Morris, Simon spokesman, said the relationship with Coddingtown is "somewhat unique" because of the shared leasing responsibility between the partners. He declined to discuss the changes in the partners' respective leasing responsibilities.

Simon recently made some personnel changes that shifted responsibility for leasing at the center from an agent in Indianapolis to one based in San Francisco.

"We wanted someone local, better connected with the community, to support existing tenants and to identify and attract new retailers," Morris said.

That agent is now working closely with Lois Codding to "increase tenant communication, field concerns and update the tenants on redevelopment possibilities for the center," Morris said.

He added that Simon's leasing agents are extremely experienced and "the best in the world."

"In an economy such as this, they are looking to talk to as many people as they can, whether they are national or local," he said.

Lois Codding agreed the relationship has improved and the partners work well together, she said. They have reverted to the original partnership agreement, making Codding Enterprises once again responsible for its share of local leasing, she said.

"We all want to see Coddingtown succeed and we're invested in making that a great center again," she said.

-- You can reach Staff Writer Kevin McCallum at 521-5207 or kevin.mccallum@

pressdemocrat.com.

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