As national trends show a rapid decline in the value of shopping malls, West Michigan commercial real estate experts are most worried about the fate of RiverTown Crossings in Grandville.
According to a Bloomberg analysis in March, U.S. mall values declined 60 percent after 2020 appraisals. Aditionally, few buyers show a willingness to take risks on aging shopping centers as the popularity of online shopping continues to grow.
“We’re fairly protected in West Michigan from devaluations of malls. The only one I’d be concerned about is RiverTown,” said Mark Ansara, managing principal and senior vice president of retail at Advantage Commercial Real Estate Services LLC. He specifically noted the closed Sears and Younkers at RiverTown as “two big vacant anchor stores.”
Toronto-based Brookfield Asset Management Inc. recently announced plans to acquire the shares it doesn’t already own in the real estate arm of its company, Brookfield Property Partners LP, which bought RiverTown Crossings in 2018. This comes after Brookfield Property Partners laid off 20 percent of its roughly 2,000 retail division employees in September.
A Brookfield spokesperson based in Chicago could not be reached for comment.
Even though Woodland Mall owner Pennsylvania Real Estate Investment Trust (PREIT) filed for Chapter 11 bankruptcy in November 2020, the Kentwood shopping center is best-positioned out of the major malls in the area, Ansara said.
“They have the top quality and top tier stores when you look at the tenants. (There are) a lot of good national retailers in (Woodland Mall),” Ansara said.
Overall, Ansara said most customers are returning to malls and “the traffic is still there.” The rate at which tenants are paying rent is also improving as companies have weathered the pandemic and states are starting to open back up, Ansara said.
RiverTown has more vacancies than Woodland, including two big anchor stores that are especially hard to fill for a two-story mall, Ansara said.
“All of the retail around RiverTown seems to be doing OK and people came out fine,” Ansara said. “Retail specifically is still doing OK, mom and pop stores are doing fine and are out there looking for their next store. Activity is definitely lower but deals are still getting done.”
The North Face opened in a new Woodland Mall expansion while Whole Foods Market has signed a lease at a nearby property because the shopping center is seen as a strong anchor in the area, said Jeff Tucker, senior managing director of brokerage and principal at Bradley Co.
“Of the two (malls), if a store is going to relocate, it will go to Woodland,” Tucker said. “Over time the Apple Store and Urban Outfitters have raised the values for their other tenants.”
However, Tucker said the health of anchor stores at malls more generally is in question. Anchor stores have been especially hard-hit by online shopping, but it remains unclear whether these spaces could potentially be repurposed for something like housing or as a distribution center, Tucker said.
Developers are discussing “all kinds of different plans” to redevelop vacant spaces at RiverTown, which is a common trend at most malls right now, said Mike Murray, senior vice president at Advantage Commercial Real Estate Services.
“Redevelopment in some fashion is being looked at in malls, starting with the bigger box stores,” Murray said. “In greater Western Michigan, we’re still low on available space, especially large space, and that’s one thing these malls offer.”
Securing agreements with anchor stores and sometimes the local municipality is a key obstacle for malls as they pursue non-retail or non-traditional uses for mall spaces, Murray said.
RiverTown has the additional roadblock of being a two-story mall, which requires replacement uses to either use all of the space or half of it. Plus, a second-story tenant is less visible and accessible to customers, Murray said.
The Lakes Mall in Fruitport Township is a possible candidate for redeveloping some of its vacant spaces into non-traditional uses, Murray said. The mall has two vacant anchor stores that used to house Sears and Younkers. Some malls are putting in hotels or grocery stores in their vacant anchor spaces, he added.
“(The Lakes Mall) is not as centrally located as Woodland and RiverTown, but it is pretty close to Lake Michigan. They have some tougher challenges there I feel,” Murray said.
Despite malls’ struggles in recent years and during the pandemic, Murray said it remains valuable to maintain and keep them open.
“There are some malls that no matter what happens they will go through a transformation or will change uses,” Murray said. “The Lakes Mall is a perfect example of people looking to use that mall for different uses just because of where it is positioned on the lakeshore.”
Brookfield sells Lansing Mall
Brookfield Property Partners also owns The Crossroads in Portage and Grand Traverse Mall in Traverse City, and sold the Lansing Mall in March to New York-based Kohan Retail Investment Group. The Lansing Mall reportedly sold for $9.2 million in early March.
Kohan Real Estate Investment Group also owns Adrian Mall, Birchwood Mall in Fort Gratiot, Eastland Center in Harper Woods, Midland Mall, Westwood Mall in Marquette, and Westwood Mall in Jackson.
Located at 5330 West Saginaw Highway, the Lansing Mall currently has 48 tenants, including JCPenney, operating in its 709,925 square feet of retail space, according to the property listing. More than 240,000 square feet of the mall is currently vacant, with 60 percent of the space occupied. Tenants generate a net operating income of $1.2 million annually, according to the listing.
“We’re hopeful that this brings some new energy and excitement to the mall and the entire corridor,” Delta Township Manager Brian Reed told MiBiz. “We’re eager to meet with the new ownership and hear their plans. We’re hoping to continue to work together and provide any assistance to their plans to make improvements.”
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