Dead Mall Hunting
They are the casualties of competition, the recession and real estate crisis—nearly abandoned malls which have just a handful of stores remaining.
These retro-malls come from a time before massive shopping centers boasted IMAX theaters, ice skating rinks and bowling alleys. It was before big box retailers and outlets became main attractions at the malls.
Wall Street Strategies Equity Research Analyst Brian Sozzi and I went dead mall hunting on a recent spring Saturday. Our destination was my old stomping grounds: the Nanuet Mall about 20 miles from Manhattan.
The Nanuet Mall, which opened in 1969, used to be the only indoor shopping center in Rockland County, New York. I remember when one of its anchor stores used to be a Bamberger's, when the parking lots were packed on weekends, and my first day of selling clothes at the Express.
Now, it's a crumbling shell of its former self. Parking lots have only a handful of cars, water stains dot the ceilings, buckets catch water in empty stores, an entire wing is filled with stores that left years ago and the old Express is vacant.
The mall has been owned by Simon Property Group , the nation's number one shopping mall owner, since 1998. The company may have some buyer's remorse from the purchase. That's the same year The Pyramid Companies opened the Palisades Center a few miles away and stores at the Nanuet Mall started jumping ship for the newer, more impressive mall.
The Palisades Center has become one stop shopping. Its anchor stores include a Lord & Taylor, JC Penney, Target and Macy's (Yes, a second Macy's). It also has a Dave and Buster's, movie theaters including an IMAX, ice skating rink and a bowling alley.
"It's a great example of survival of the fittest unfolding in the consumer spending jungle," said Sozzi.
Even the most successful shopping mall owners have a few bad apples in their portfolios, according to Stifel Nicolaus Retail REIT Analyst Nathan Isbee, who has a "buy" rating on Simon Property Group. Despite stubbornly high unemployment and the popularity of internet shopping, he said overall sales at Simon's malls are strong.
"Simon Property Group's portfolio 93% occupied which is close to an all-time high for them right now," said Isbee. "Nanuet is clearly facing some difficulties, but there is nothing alarming about the fact a mall in Simon's portfolio is facing trouble. It is the natural evolution of any retail center. Some malls will face more competition as neighborhoods and regions change."
A few years ago, before the real estate crisis, there was talk the mall would be to ripped down to make room for an outdoor shopping center with condos. Destruction plans were delayed— that is until now.
So, what's in store for the Nanuet Mall?
Simon Property Group Spokesperson Les Morris said, "We expect to make our formal announcement in the next month or so. We do plan on tearing down the mall and putting up an open air regional center anchored by a Sears, Macy's, a theater and a grocery store."
How this will revive life into where a dead mall lives raises questions such as "They're keeping Macy's even though there's one down the road?" Answers will hopefully come soon.