Former Kirkland resident Matt Harding described the Totem Lake Malls as “some kind of gateway to the netherworld.”

Harding became an Internet sensation for dancing in different places all over the world, including 42 different countries, and posting the videos on YouTube. The lower mall was the “most depressing place I’ve ever been. I almost didn’t make it out,” he wrote in his Web site FAQ.

He visited the malls on his lunch break a few years ago.

“My memory of it is cloudy and probably exaggerated,” said Harding, who now lives in Seattle. “I just remember it being empty and concrete. They were playing some old musac inside and it was bouncing off the walls and echoing. It was moribund.”

Others in recent years have dubbed the malls as the “white elephant,” “albatross around the city’s neck” and the “sleeping giant.”

The malls have also gained national notoriety for being one of the worst in America on several consumer Web sites, including The Sledgehammer and Dead Malls.

Many locals say there’s been an apparent lack of attention given to the languishing Totem Lake Malls – even in the fine details. On the malls’ own Web site, the headline is titled: Totem Lakes Mall.

The first part of the five-part series on one of the most important pieces of real estate in the city looked at the history of the Totem Lake Malls. This week, the Reporter examines what led to the demise of the once-bustling economic engine of Kirkland during the second part of the series.

One big bankruptcy

Seventy stores populated Totem Lake Malls when they opened in 1973-74. The malls grew during the rest of the decade and on into the early 1980s to more than 80 stores. Currently, there are just 27 businesses in the same area.

What led to such a drastic change?

One of the biggest contributing factors to the malls’ downfall occurred in 1996 when the Pay N’ Save Corp. went bankrupt. The bankruptcy triggered the loss of Ernst, Pay N’ Save and eventually Lamont’s.

“It was a happening mall when we had Ernst and Lamont’s and rarely a vacancy,” said John Fleshman, who owns Denny’s Pet World in the upper mall. “When it (the mall) was owned locally, those were the best years without a doubt.”

The only remaining store from the Pay N’ Save Corp. is Big 5, originally Sportswest. Lamont’s, which filled the anchor spot in the malls, was bought out by Gottschalks in 2000 and eventually closed. The loss led many businesses to vacate during the early part of this decade.

A lack of steady mall ownership during this period also contributed to the free fall.

Fleshman remembered getting a notice that his rent was late in the late 1990s.

“I knew I had sent it so I called them,” he said. “I remember the person I talked to had to ask someone in her office if they owned a mall in Washington state.”

The malls had the same local ownership during the first 26 years. During the last 13 years there have been three different ownership groups, each promising to redevelop.

The changes took a dramatic shift in 1999. According to tax records, the original owners of the lower mall, Totem Lake Shopping Associates, and the upper mall, H&M Associates, sold both properties in 1998 for a combined $25.8 million. It is unclear whether the two companies were linked in any way. AMB Property LP sold the property to the California Public Employees’ Retirement System just 22 months later for $34 million – an $8.2 million profit.

There has been speculation as to why the land turned such a profit. Kirkland City Planner Eric Shields theorized that “a very hot real estate market and the city preparing a comprehensive plan and zoning, which increased development potential may have contributed.”

Attempts at redevelopment

In 2006, the City of Kirkland and the current owners, Developers Diversified Realty (DDR) and Coventry Real Estate Advisors, which bought the property in 2004 for $37 million, entered into a development agreement. The city agreed to invest $15 million into the project. Some of the money was for the construction of a parking structure.

According to the 2005 Conceptual Master Plan, the city cited the malls’ underperformance, ideal location and value to taxpayers as reasons for the investment. The plan also noted reasons for the decline, including “age, failure to meet the demands of contemporary tenants and an unusual configuration … with inadequate connectivity and sense of place.”

The city anticipated that tax and other revenue from the redeveloped site would pay the debt service of any city bonds issued to fund a portion of the investment.

In 2008, the city was to receive $3 million from the state to go towards the project, but when the ownership group walked away from the agreement in 2009 due to a lawsuit between the two owners, the money was redirected to the Parkplace Development in downtown Kirkland.

Redeveloping the land is not a new idea. The malls underwent a major upgrade during the late 1980s but not much has been done since.

Fleshman has seen at least four different architectural drawings of redevelopment possibilities since the upgrade.

“The only people who are making any money are the architects,” said Fleshman.

The most current set of plans had a 13-screen cinema with 3,000 seats, parking garage and a large workout gym.

A business owner contacted the Reporter in 2008 after a story ran on potential redevelopment, about opening a movie theater at the site.

“We’ve never seen any redevelopment plans before DDR. Everything previously was about sprucing things up – for example, the redesign at the north end of the lower mall for Car Toys and Ross,” said Shields.

Despite attempts at redevelopment, investors and owners of the malls have been unable to devise an economically feasible plan for renovating the malls. The primary reason for this was the inability for owners to justify the significant expense associated with redevelopment. Unlike new construction, redevelopment of existing property involves additional complexity and expense – including relocation and accommodation of tenants, demolition and modernization of aging structures, among others, according to the city’s Conceptual Master Plan.

Geographic issues

The street that divides the upper and lower malls, 120th Ave. N.E., has been an issue in any site redevelopment. It was originally constructed for southern access to Evergreen Hospital prior to the expansion of the 405 freeway. According to the 2005 Conceptual Master Plan, the city was willing to make changes to the road in order to accommodate redevelopment.

Whatever the malls are called – the upper and lower malls, east and west malls, first and second malls – makes it confusing for many people.

“It is funny because people will be in the lower mall and look up and ask ‘how do I get to the upper mall,’” said Fleshman laughing.

The original layout has also become a part of the problem, according to the redevelopment agreement from 2006: “There is no store frontage on 120th Ave. N.E. and poor signage. The upper mall faces the backside of the lower mall … and the lower mall impedes views to the upper mall. The separation of the upper mall from the lower mall by a very busy connector street impedes pedestrian-friendly cross-shopping, segregates the malls, eliminates the unique identity and sense of place …”

The second access road to the malls, Totem Lake Boulevard, can flood during heavy rainstorms, thanks to the surrounding wetlands. The result is road closures, as seen twice in the past two months. Located just to the southwest of the malls, Pizza Hut’s main entrance was shut down both times.

“It hurt (our business),” said Paula Trott, who has been the general manager of the Pizza Hut for three months and a Kirkland resident for nearly 30 years. “For four days it was blocked (in December).”

Trott said that the Department of Transportation has also expressed frustration with the issue.

A portion of the mall was also built on top of the wetland. Fleshman said he remembers watching, as an 11-year-old in 1972, the huge pylons being driven into the earth in order to get down to solid ground.

“If you look down the length of the mall you can still see the floor is a little wavy,” he noted.

Bob Lightfeldt, who owned the Shady Lady (formerly Betty’s Apparel) in Totem Lake from 1973-88, said he remembered Ernst having to be jacked up and put on piers due to sinking.

The roof has had many issues as well. A collapse in 1974 of the upper malls’ roof, windstorms in the late 1980s and during the Inaugural Day windstorm of 1993 damaged the lower mall’s roof.

“I thought it was chilly that morning,” joked Lightfeldt of the windstorm in the late 1980s. “The entire piece was ripped off.”

A snowstorm in 1997 triggered the collapse of a section of the lower mall’s roof as well, which ruined the original parquet wood flooring.

Missed opportunities

Many people have suggested the malls’ missed opportunities thanks to the openings of Redmond and Woodinville Town centers in the past 15 years.

“You can only have so many box stores within so many miles of each other,” said Fleshman.

The opening of the Redmond Town Center in 1997 directly hastened the decline of Totem Lake Malls as it lured businesses away. Alex Simis, the owner of Piccolino Deli, broke his lease at Totem Lake to move to the new development.

“The possibility of increasing my sales convinced me to move to Redmond because I didn’t see that happening at Totem Lake until after the redevelopment,” Simis told the Seattle Times in 2004.

Many more businesses left during this decade for different reasons, including Old Country Buffet, Comp USA and Rite Aid, which moved just to the south, paying to construct its own building.

The mall started to suffer even before the late 1990s, according to Lightfeldt.

“The addition of the Fred Meyer, Alderwood Mall and changes at Bellevue Square changed things,” said Lightfeldt, who was the first Totem Lake Malls Association president.

The opening of the Bothell Crossroads project in the fall of 2012 will also have a big impact, possibly taking another potential anchor store or two.

A new anchor store for Totem Lake Malls has been discussed in the recent past.

“I’ve heard at one time IKEA was very interested,” said Kirkland Mayor Joan McBride in an e-mail to the Reporter.

Many residents have also said that Target was rumored to be the new anchor store for the 2006 redevelopment plans.

“In conversations with DDR, we got hints, but never any explicit assurances, that Target could be one of the anchor tenants,” said Shields.

The Reporter received these comments from Target spokesman Antoine LaFromboise: “Unfortunately, I am unable to share specifics at this time about a potential store in Kirkland. Typically, we can confirm plans for a new store within one year of the scheduled opening. The reason for this timing is to avoid disappointment and misinformation within a community if store opening plans change.”

Target, along with other large chains such as Home Depot, Borders, Barnes and Noble, Macy’s and REI, have since opened stores in new developments around Kirkland like the Redmond and Woodinville Town centers.

Despite the potential missed opportunities, LaFromboise said “It is not uncommon for a Target store to be within a few miles of another Target. In some instances, we have Target stores across the street from one another – it all depends on what the market can support. We position our stores to ensure they have the products our guests need, when they need them.”

And some still have hope for the malls.

“I have always had high hopes for Totem Lake Malls because Crossroads suffered similar declines,” said Loita Hawkinson, president of the Kirkland Heritage Society. “But Crossroads kept at it until they had a good combination of merchants – they got too classy, then too edgy and finally went family-friendly and succeeded.”

The rebirth of Crossroads Mall in Bellevue was the brainchild of local developer Ron Sher. Crossroads was built nearly a decade before Totem Lake Malls and hit steady decline during the 1990s. Many critics said that the malls location away from the freeway and close proximity to Bellevue Square were death knells. Sher purchased the property in 1998 and remade the mall into a profitable center before selling it late last year.

Lawsuit

A lawsuit between the two current owners has also contributed to the failure of the mall, as the owners officially put the redevelopment project on hold in 2009 when the lawsuit began.

Coventry/DDR and their lawyers did not respond to numerous phone calls and e-mails from the Reporter for comment. The lawsuit and a profile of the ownership group will be the focus of the third part in this series.

But no matter what the reason for the demise of the malls, most Kirklander’s sentiments about the mall are the same.

“We used to be able to eat here,” said Fleshman, about the selection of restaurants that were at the mall. “It is almost embarrassing to tell people we are in Totem Lake.”

Sound off

Fill out a survey on Totem Lake Malls as a part of the Reporter’s series “Kirkland Conversations.”

Editor Carrie Wood contributed to this report.