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