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After Mervyn's, what' A Kohl's'

The chain with products similar to Mervyn's might leap at the opening, say local experts

So what happens to 80,000 square feet of retail space on the north end of Rogue Valley Mall when Mervyn's closes March 31?

The folks who follow the ebb and flow of the retail industry and commercial real estate transactions have established the early favorite as Kohl's, an aggressively expanding department store chain that retails an inventory similar to Mervyn's.

Kohl's is your main candidate, said Chuck Martinez of Commercial Realty Advisors on Tuesday. They're expanding, have made deals in Eugene and have stores under construction in Gresham and Washington County.

The limited supply of big-box retail space and the mall's regional consumer draw are a siren call to companies wanting to crack into the Rogue Valley market.

I don't think it's going to be hard to fill that vacancy because of the lack of commercial property to build on, said Curt Burrill, whose family developed Crater Lake Plaza.

— Mervyn's announced the Medford store was one of three to close March 31, while 17 other Northwest stores would remain open as late as February 2007.

That Mervyn's days were numbered came as little surprise because the retailer had been posting years of lackluster performance. The rapid closing schedule, however, suggests the retailer's owners ' an investment consortium of Sun Capital Partners, Cerberus Capital, and Lubert-Adler/Klaff ' may have a prospective buyer waiting in the wings.

There is a lot of pent-up demand from companies that haven't found a place to locate, Martinez said. That's part of the evolution of how retail moves. People have ideas and concepts and retailing advances around those ideas. Sometimes they work and sometimes they don't.

Kohl's would fill the vacuum nicely. The Menomonee Falls, Wis., retailer operates about 675 discount department stores in 40 states.

The company had sales of more than &

36;11.7 billion in fiscal 2005.

Kohl's is now the darling of the limited-line and middle-market type of retail, Martinez said. They're aggressive and certainly doing a lot in the Portland areas and looking into Eugene. If they're looking at Eugene you can almost be assured they're looking at Medford.

When Meier & Frank and Mervyn's came to Medford nearly 20 years ago, they negotiated ownership of their buildings and the land beneath them, Rogue Valley Mall general manager Jeff Barber said. JCPenney carries a long-term lease.

Mervyn's demise comes five years after Montgomery Ward failed and shuttered its stores across the country in December 2000. The economy at that time was wobbling in the wake of the dot-com crash, and the events of Sept. 11 that followed further eroded consumer activity. It wasn't until September of 2002 that Copeland's Superstore opened in the upper deck of the mall and the Meier & Frank Home Store opened below in spring 2003.

Unlike that cycle, Jackson County's job creation and generally strong economy point to a shorter period. Even so, a new occupant would need everything to fall into place to be open by the Christmas shopping season.

The best-case scenario, if you signed a lease today, at best would be around three to four months, said Medford Center Sears store manager Mike Beugli. That would be phenomenal. Even Christmas season would be optimistic, because the average time is six to eight months.

Where will the money that has been spent at Mervyn's go until a new retailer comes to town?

Martinez said Mervyn's appeal is the middle 60 percent of shoppers, neither high-end nor low-end.

Those middle-60 dollars will be spent probably at Target, Penney's and Sears, Martinez said. They're not competing with Meier & Frank, Chico's or somebody like that.

Beugli has watched competitors leave in other cities and predicted the mall will see a decline in foot traffic this spring.

The customer that regularly shops Mervyn's may not drive to the mall, and other retailers will pick up that market share, Beugli said. Footsteps will go down because there is one less major reason to go to that mall.

Conversely, he said, when a new store plugs into the location there is always an initial increase in foot traffic to see what's there.

If Kohl's passes on the opportunity, Burrill is sure the site will attract plenty of attention.

If a retailer that doesn't have a presence in the valley right now comes in, it will definitely give a shot in the arm to the mall.

After Mervyn's, what? A Kohl's?"business@mailtribune.com.

Customers walk toward the Mervyn?s end (seen in background) of the Rogue Valley Mall in this 2001 photo. The decision by Mervyn?s to close its Medford store March 31 is fueling speculation about what may replace it.