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Part 4: The current impact of Kirkland’s Totem Lake Malls

This graph shows how sales-tax revenue for Kirkland in different retail areas of the city have changed during the past two decades. - Matt Phelps, Kirkland Reporter
This graph shows how sales-tax revenue for Kirkland in different retail areas of the city have changed during the past two decades.
— image credit: Matt Phelps, Kirkland Reporter

Walking into the main building of the Totem Lake Malls is surreal, especially during the holiday season. The normal hustle and bustle, white noise of conversation and sale signs were replaced with a musty smell, shadows of old storefront signs and the echo of one set of footsteps.

The silence is deafening with only 10 of the 23 available spaces occupied in the lower mall. That feel has persisted for years.

In this fourth of a five-part series on Totem Lake Malls, the Reporter will look at the current state of the malls, the economic impact of the malls and how the larger neighborhood has survived during the decline of one of the most important pieces of real estate in Kirkland.

Economic impact

The impact of Totem Lake Malls goes beyond shopping convenience. Tax revenue from businesses help the city provide essential services to residents. Tax records give a glimpse into the success or failure of some business ventures.

According to city tax records, the malls have been in a steady but steep decline since 1992 when it was still doing relatively well.

The Reporter requested tax information not only on the Totem Lake Malls, but also the area surrounding the malls and downtown Kirkland.

Totem Lake Malls accounted for 4.8 percent of the city’s total sales-tax revenue in 1992. It was just 2.3 percent in 2009.

The malls’ overall sales-tax revenue has declined from $367,238 in 1992 to just $287,052 in 2009. That drop may not seem that significant without taking into consideration the decline in the last decade. In 2000, the malls’ total sales-tax revenue spiked to $491,125, accounting for 3.9 percent of the city’s total.

But the fall of Totem Lake Malls has not meant an equal decline in the surrounding business area.

“We don’t want the mall inaction to totally obscure some of the businesses that are thriving,” said Ellen Miller-Wolfe, Kirkland’s Economic Development manager.

The Totem Lake business district as a whole, including the malls, has made modest gains. In 1992 the neighborhood accounted for 32.9 percent of the city’s total sales-tax revenue, while it was 31 percent in 2009 – just a drop of 1.9 percent. The malls alone dropped 2.5 percent during that same time period.

The .6 percent growth in the neighborhood comes despite the dramatic decline of the malls – the biggest piece of retail real estate in Kirkland to be seen from Interstate 405.

The Totem Lake neighborhood, which includes the malls, took in $2.5 million in 1992 and nearly $3.8 million in 2009, a 34 percent increase in sales-tax revenue. The neighborhood reached a high of $5 million in 2007, an increase of 50 percent from 1992. Those increases came despite Totem Lake Malls’ decline. The malls biggest decline in sales-tax revenue came between 2000-2009, dropping from $491,125 to $287,052, a 32 percent decrease.

Also, in comparison the downtown business core has increased from 6.4 percent of the city’s total sales-tax revenue in 1992 to 7 percent in 2009. The downtown business core does not have the advantage of being seen from the freeway.

Total revenues for all the areas have increased since 1992 with the exception of Totem Lake Malls. Kirkland’s downtown sales-tax revenue has increased from $493,006 in 1992 to $927,065 in 2009, an increase of 47 percent. The downtown had a high of $1.1 million in 2008, an increase of 56 percent from 1992.

So what difference would a working mall make for the City of Kirkland?

A huge difference – said Miller-Wolfe.

“Anyone could say that if the mall were to be filled, it would be great. It would bring more people into the district, so that’s a good thing,” she said.

Actual numbers from a cost analysis report commissioned by DDR in 2005 back that up.

When the city negotiated a redevelopment agreement, DDR hired Mundy and Associates to determine how much the redeveloped site could contribute to the city’s sales-tax revenue. The report projected the malls would bring in $1.64 million in sales-tax revenue per year for the city.

Miller-Wolfe added that though the cost estimates are dated, the numbers “certainly show something significant that would come with redevelopment.”

Life around the mall

There are still many reasons to venture to the Totem Lake neighborhood for business. West Totem Lake, across 405, has been built up in recent years with some notable businesses such as My Home Wholesale, Play N’ Trade video games, QFC, Courtyard Mariott hotel, Azteca and an Olive Garden have joined long-time businesses Fred Meyer and Dunn Lumber.

South of the mall is a shopping area that has Laughs Comedy Spot, a thrift store, some restaurants and an auto row across the street.

But the lively atmosphere to the west makes mall tenants think about their future.

“I always wonder how much better we would do with more businesses around us,” said Denny’s Pet World owner John Fleshman, who has two years left on his lease. “... I would love to sign a 10-year lease.”

The Totem Lake neighborhood accounts for 36 percent of Kirkland jobs on just 13 percent of the city’s acreage and 11 percent of its population. Thirty-six businesses employ 50 or more workers. Evergreen Hospital Medical Center is Kirkland’s biggest employer. The facility employs 3,290 workers, with 522 living in Kirkland. Bothell is second with 483. The rest of the Eastside accounts for 714 employees.

The city has designated the Totem Lake neighborhood as an “Urban Center.” That designation has established it as a priority for investments in growth. The BNSF rail line that is just to the south of the malls has been discussed for light rail and even a pedestrian commuter trail.

Business is in the eye of the busy

The economic impact can be actually seen in the lower mall as it looks like something from the 1990s. Pay-phone booths with no phones, clean walls where store signs once hung and a storefront called the Sweet Shop that looks like it could open at any time despite being vacant for years. The mall directory still identifies Lamont’s, the anchor store until 2000, as an active store, though it closed over a decade ago. One of the last businesses to close, the Old Country Buffet, still has the fountain machine and buffet lines in the dining area. A sign in the main area of the mall states the rules of conduct, despite being a “ghost town” most of the week.

One area where the malls have struggled is in dining, as it has more banks on the property, three, than restaurants, one.

Some mall elements have life. The northwest parking lot is one of the most used as customers frequent Ross Dress for Less, Car Toys and Famous Footwear. But only three storefronts remain open inside the mall: Sleep Country USA, Family Christian Stores, the weekend-only ShopSmart Bazaar and Tuoi’s Olympic Tae Kwon Do Center. The latter two are the newest tenants.

With a vacancy rate of 53.1 percent, ownership group Coventry/DDR is attempting to fill storefronts with low-lease rates. Tuoi’s Olympic Tae Kwon Do Center moved in to Totem Lake Malls in August.

“It is a new opportunity,” said owner Tuoi Le. “I was in Woodinville for too long, 15 years.”

DDR has a new tenant program with year and seasonal options.

Le said that the rates were really low.

“They are trying to get some different people in here,” said Le, who’s daughter is on the National Olympic team. “They have great rates.”

But Fleshman has another take on the short-term leases: “People notice when stores don’t put up a real sign. The banners just don’t cut it.”

Other signs of vitality include ShopSmart Bazaar, which took over the old Lamont’s space in December and recently opened. A Metro bus route board is completely stocked, but untouched.

The lack of maintenance in the mall is evident as ceiling tiles, carpeting and lighting have been destroyed by roof leaks. During the week the southwest parking lot has more business vehicles from Two Men and A Truck and the discount furniture store, than cars from patrons.

The east mall, with seven of 16 storefronts full, is dominated by rental signs. Stores such as Guitar Center, Trader Joes, Big 5, Hallmark, Totem Lake Cinemas and the Trading Post have been able to endure the past decade.

But the future is what store owners want to talk about.

“The uncertainty is the worst part,” said Fleshman. “We could make so many improvements if we knew we had a future ... We have had constant growth despite the malls. I certainly hope to be a part of any remodel.”

Next week, the Reporter will take a look at possible ideas for the future of the site and results of the Kirkland Conversations survey on the malls during the final piece of the five-part series. The other parts to the series have covered the history of the mall, the demise and a profile of the ownership group.

Reporter editor Carrie Wood contributed to this report.

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