An Oklahoma City shopping mall and high-end retail tenant are experiencing the indirect effect of the oil and gas industry’s economic downturn.
Iowa luxury retailer, Von Maur, opened its 30th store in Quail Springs Mall in October 2014.
The 155,000 square foot store is the fourth anchor at the mall. Von Maur offers upscale brand-name apparel, footwear, jewelry, handbags and gifts.
Factoring into Von Maur’s decision to expand to the metro was a lucrative $2 million sales incentive deal between the mall owners and the City of Oklahoma City; however, the retailer has not met the minimum sales thresholds required for the sales incentive.
Melody Wright, chief operating officer for Von Maur, said that while sales at the Oklahoma City store have been affected by lower crude oil prices, the company has been pleased with the store’s performance.
“We hadn’t been open that long when we kind of started to see some of the pressure of the oil industry,” said Wright.
Under the terms of the incentive deal, Von Maur was required to reach $27.5 million in gross taxable sales during its first year of operation at Quail Springs Mall for its landlord, General Growth Properties, to receive an incentive payment of 0.5 percent of gross taxable sales, up to $225,000 from the city, according to a report in The Oklahoman.
The Von Maur store in Quail Springs Mall was projected to generate as much as $40 million in annual sales, according to city documents.
The mall owner also agreed to spend at least $15 million buying and remodeling the former Sears store at Quail Springs in order to attract Von Maur. Oklahoma County records reveal $8 million was spent purchasing the property before major renovations.
There’s no question that Oklahoma’s oil bust has significantly impacted retail operations in the state.
Retail sales are down across Oklahoma City, in part due to a downtown in the local economy tied to low crude oil prices, according to Brent Bryant, economic development program manager for Oklahoma City.
“We are seeing a decline in sales tax revenue throughout the city and that’s part of it,” said Bryant.