PORT ORCHARD — The commercial development company Zaxium, whose ownership purchased the Towne Square retail center for $9.4 million in late April, says it has big plans for the once-thriving but now moribund property at 1700 Mile Hill Drive.
The investor-developer team behind Zaxium have big plans for the sprawling property built by the Gehring family — plans that include multiple restaurants, shopping options and a large plaza gathering place that they hope will attract people from among South Kitsap’s growing community.
But a turnaround and resurrection of the landmark Port Orchard shopping mall is going to take time, one of the co-owners acknowledged last week.
As with most properties its size — 155,000 square feet in the case of the South Kitsap location — in dire need of upgrades and rebranding, developers Ray Klein and Kane Fenner say what first needs to be accomplished involve infrastructure repairs and upgrades not visible to the casual observer.
First comes maintenance fixes
The 40-year-old shopping mall has extensive deferred — and expensive — maintenance items for Klein and Fenner to tend to, including addressing plumbing issues and a replacing leaky roof. One item checked off the list this week was the $300,000 replacement of the property’s expansive roof.
Work on the plumbing and sewer system, he said, is dependent on weather and the availability of parts delayed by the pandemic. Initial plans called for the work to be completed this fall, but it’s estimated it won’t get done until next year, Klein said.
“We’re six months in and we’re stabilizing the place,” Klein, who lives with his wife in Bremerton, said of the property. “We’re trying to understand it and find out where we want to go in the next year.”
What visitors will begin to notice outside sometime next year is a makeover of the mall’s exterior facade.
“We decided it wouldn’t be unreasonable to redo the facade,” he said. “That’s what we want to accomplish next year. The look means everything. We’d like to make it a modern, clean, fresh look.
“We’ve set some aggressive plans for ourselves to fix the plumbing, but the facade is what people see,” Klein said as he led a tour of the exterior. “It’s a high priority to finish as much of the facade as we can [by the end of next year]. We have a long-term plan and conceptual drawings to improve the facade in the short term.”
Long-term plans call for widening the building’s plaza into the parking lot. A stairway spilling out to the exterior lot is also part of the plan, but it won’t get done next year, Klein said. Next to Grocery Outlet is an undeveloped parcel that could house additional retail space or even residential housing.
“It could be used for residential but I think it’s better suited for commercial use,” he said. “We could do it on spec or build to suit.”
Shortly after the sale of the 12.75-acre property closed in April, the company’s five-person operations and maintenance team went to work fixing critical issues, including filling potholes in the expansive parking lot, which can accommodate 430 vehicles.
“There were some really bad, really deep potholes in the parking lot. We got them filled,” he said.
Inside the mall building, the team identified sections to be cleared of signage, furnishings and miscellaneous items, giving the interior a more spacious and inviting appearance. But more extensive changes inside will take place once it’s better understood what new tenants join the mall.
Klein said Towne Square is about 90% occupied by 70 tenants, many of them on month-to-month leases. There are anchor tenants Scott Mclendon’s Ace Hardware, Goodwill, Grocery Outlet at either end of the center, as well as a large consignment store inside the mall.
A business model from the Eastside
One reimagined shopping mall the developer says he’s using as something of a template for this project is Totem Lake Mall in Kirkland. For three decades, the property skirting to the east of I-405 had seen most of its top retailers depart despite its prime location. A revolving door of ownership allowed the property, through benign neglect, to become outdated and uninviting.
In the past several years, however, new owners initiated a striking turnaround by reinvisioning the property into a destination location with innovative landscaping and an updated facade. More importantly, though, was the introduction of a mix of retail offerings featuring a large number of restaurants, making the center more of a dining destination than a shopping venue.
Klein said he hopes for a similar turnaround for Towne Square in Port Orchard.
“One of the appealing aspects [of Towne Square] is that it’s right across the street from [South Kitsap High School],” Klein said. “I think it should be a destination for students and their families. We’d also like to include a mix of family-oriented restaurants and venues.”
The shopping habits of consumers have evolved over the past few decades, he said, where dining experiences have become their primary destination, with retail shopping secondary.
“For this property to be successful, I think we need four to five — maybe six — food venues on this property,” Klein said. “It only had two in the past [Godfather’s Pizza and A&W]. We’d welcome one or two national restaurants, although regional dining spots would be more appealing.”
Ideally, he said, a restaurant serving pizza and “a good burger place” would work well sited alongside an Asian restaurant or an establishment serving, say, a line of soups.
But for folks with an attachment to the name Towne Square, it’s likely they’ll need to get used to a new moniker down the road. Klein said he’s considering some alternate names that might better fit a reimagined property.
Towne Square’s new ownership has other properties in Kitsap County. Klein and Fenner, who met while living near each other part-time in Tokyo, looked for opportunities to buy properties near Fenner’s hometown of Seattle. After they returned permanently to the Pacific Northwest, the team began investing in the Sodo area of Seattle. And while looking for business opportunities in the region, they entered the undervalued Kitsap market and bought properties in Poulsbo, including a building housing a veterinary clinic and an old video store. The latter now houses a Multicare medical clinic.