Converting empty malls to warehouses isn’t easy

Developers face a host of challenges when transforming malls into other uses

National /
Jan.January 19, 2021 12:30 PM
North Point Mall in Alpharetta, Georgia (left) with Brookfield's Brian Kingston (iStock; Brookfield; Google Maps)

North Point Mall in Alpharetta, Georgia, (left) with Brookfield’s Brian Kingston (iStock; Brookfield; Google Maps)

As demand for e-commerce grew and large tenants like Sears closed up shop, some mall owners sought to redevelop their struggling properties into warehouses, residential buildings or office properties.

But the task has proven more challenging than expected, according to the Wall Street Journal. Mall owners are required to spend hundreds of millions of dollars on construction and labor costs. The new developer might not have ownership of the individual department stores or parcels, further complicating matters.

Some failed redevelopment efforts have resulted in the owner selling the property at a discount or turning it back over to its lenders.

Last week, Brookfield handed over its North Point Mall in Alpharetta, Georgia, to a lender even though it had previously scored rezoning approvals to bring hundreds of residential units to the property in 2019, the publication reported. The property’s value fell below its loan balance of about $200 million.

In July, Brookfield nixed its plans to redevelop the former Burlington, Vermont mall. The developer said that, at that time, the long-term nature of the project’s next phase didn’t fit with its funds mandate.

In other cases, local governments may step in. Just outside of Atlanta, an investor sought to redevelop the former Gwinnett Place Mall into a 20,000-seat cricket stadium. But the deal fell apart when the two sides couldn’t reach a deal. Last month, the county decided to buy the mall for $23 million.

[WSJ] — Keith Larsen


Related Articles

arrow_forward_ios
Southland Mall in Cutler Bay (Google Maps)
Lender takes control of struggling Southland Mall in Cutler Bay
Lender takes control of struggling Southland Mall in Cutler Bay
North Delray Commons at 455 & 555 Northeast 5th Avenue in Delray Beach (Photos via Google Maps)
Benderson buys Publix-anchored Delray Beach shopping center for $9M
Benderson buys Publix-anchored Delray Beach shopping center for $9M
Brookfield Property Partners CEO Brian Kingston, Dacra president and CEO Craig Robins and LVMH chairman and CEO Bernard Arnault with Miami Design District (DACRA, Getty)
Here’s what some tenants are paying in the Miami Design District
Here’s what some tenants are paying in the Miami Design District
Thor Chairman Joe Sitt, Stefano Ricci CEO Niccolo Ricci and the Miami store. (Getty, Thor, Miami Design District)
Thor Equities sued over alleged unpaid loan on Stefano Ricci Miami Design District store
Thor Equities sued over alleged unpaid loan on Stefano Ricci Miami Design District store
Miami City Ballet (City of Miami Beach, Google Maps, iStock)
Workforce housing project approved for South Beach’s Collins Park
Workforce housing project approved for South Beach’s Collins Park
From top: Ruben Lujo from Broward Meat, SunCap's Scott Auker and Ross Realty's Barry Ross with Penn Dutch Plaza shopping center in Margate (Linkedin, Google Maps)
Part of Margate shopping center formerly anchored by Penn Dutch sells for $12M
Part of Margate shopping center formerly anchored by Penn Dutch sells for $12M
The Shops at Sunset Place and Midtown Opportunities' Alex Vadia (Photos via Google Maps; TAMZ)
Clearance sale: Shops at Sunset Place sells at major discount
Clearance sale: Shops at Sunset Place sells at major discount
Life Time Coral Gables rendering with Niven Patel (Life Time, Ghee Hospitality)
Niven Patel, Graziano’s ink restaurant leases at Life Time Coral Gables
Niven Patel, Graziano’s ink restaurant leases at Life Time Coral Gables
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...