SHARING THE PAIN
When a mall deteriorates, retailers and mall operators suffer, but so, too, do the municipalities that depend on those malls for a significant portion of their tax revenue. Recently, towns like Burlington and Voorhees have considered extreme measures to deal with their dying malls. The Burlington Center officially closed in January, although its Sears anchor is still operating, at least for the time being. That leaves the town with an eyesore and a sputtering revenue engine. Over the past several years, Burlington’s municipal officials have been in conversations with the mall’s Las Vegas-based owner, Moonbeam Capital Investments, about redeveloping the 1.5 million square feet of retail space, but the talks haven’t yielded much in the way of results.
“We encouraged them to come to the township to request that the area be designated in need of redevelopment,” says Burlington Township mayor Brian Carlin. But that hasn’t happened, and the town is now losing shoppers to nearby Cherry Hill and Moorestown. Carlin expects Moonbeam to eventually file a tax appeal, arguing that the mall has lost value, and that could mean a further reduction in tax revenue for the town. There has been talk about seizing the mall through eminent domain, but that doesn’t sit well with Carlin. “Being a lawyer and respecting property rights,” he says, “I’d rather figure out a way to make it work without the intervention of eminent domain.”
Municipal officials in Voorhees are more actively considering the measure in order to seize the township’s flagging mall. Voorhees Town Center (previously known as the Echelon Mall) lost its Macy’s anchor in 2017. About half its retail space is vacant. Mario DiNatale, the township’s director of community and economic development, expects vacancies to rise, particularly since he believes current owners Namdar Realty Group and Mason Asset Management, both of Great Neck, New York, don’t appear to be interested in maintaining or modernizing the mall. “One of the escalators has been broken for four months,” he says. “In certain areas, the lights had been out for six months.”
“I don’t think the issue has ever been that we are not maintaining it,” responds Elliot Naseem, owner of Mason Asset Management. “Since we bought it, we’ve been trying to lease and redevelop it, with all options considered. Unfortunately, we haven’t been able to get traction as quickly as we’d anticipated.”
In May, the Voorhees Township committee adopted a redevelopment plan giving the town condemnation powers through eminent domain. “It gives us the ability to try to convince the existing owner to pay attention to the property a little bit better, or we’ll take it and sell it to somebody who will,” says DiNatale. He’s been in touch with several potential developers, one of whom proposed adding zip lines, a rock-climbing wall, indoor go-carts, and enhanced dining amenities, such as a microbrewery and wine-tasting spots. “Our apartments are full of millennials,” he says. “And rather than have to get on the train and go downtown, they could hang out at the mall if there was enough for them to do there.”
The Experiential Future
Giving millennials something to do is at the core of efforts to revitalize poorly performing malls and keep the high-performers booming. If they want to do their shopping online, the thinking goes, then draw them in with something the Internet can’t replicate—something experiential. That’s the buzzword among retail developers and analysts. Rather than relying on sales of shirts and running shoes, they say, the malls of tomorrow must sell experiences. It’s a big part of the thinking behind American Dream, the behemoth once again rumbling in the Meadowlands.
You can already see the experiential wave sweeping into New Jersey malls. Dave & Buster’s, the restaurant-cum-play-space, is moving into vacancies left by the closing, or partial closing, of former Sears stores—most recently at the Willowbrook Mall in Wayne. Gone are the circular saws and dishwashers once peddled by Sears. Instead, millennials can get buzzed on Zombie Snatcher and Star Wars Battle Pod.
Non-shopping experiences have always been a part of a trip to the mall, though they were often limited to the food court or draws for children, like the carousels at Woodbridge Center and Freehold Raceway Mall. Today, they’re more likely to involve the kind of games proffered at Dave & Buster’s or the adventures on tap at escape rooms like the Mystery Room at the Rockaway Townsquare mall, where you pay good money to enter a space and then find your way out.
Malls are also becoming venues for fitness centers, gyms and yoga studios, as well as outré experiences like cryotherapy, which involves getting really cold for a brief period of time in order to treat conditions like insomnia and arthritis.
“One of the most active retail categories out there right now is health, wellness and fitness,” says David Townes, senior director for retail brokerage at Cushman & Wakefield in East Rutherford. “They’re very attractive tenants for all kinds of owners, from enclosed malls to neighborhood shopping centers.”
Urgent-care centers are another attractive tenant for mall operators. “People are looking for convenience in their daily lives,” says Onder, “and malls are seeing that this is a positive for them, because it will bring people in and then keep them there to do their shopping.”
Malls also are increasingly welcoming temporary, pop-up experiences, like the Public Market at Garden State Plaza, a collection of artisanal-food sellers that opened—and closed—this spring and included jazz performances and trapeze-fitness demonstrations.
On one April afternoon, Nick Gonzalez and Darrel McDowell, both 17, were hanging out at the Market after school, enticed by the Puerto Rican cuisine at El Lechon de Negron, a pop-up incarnation of an eatery located year-round in Union. A few tables away, Jisele Fernandez, Edwin Sanchez and Andrea Bass were playing cards with an oversize deck—one of several games scattered around the Market—while waiting for their order from the Jerk Shack Grill. “We come to the mall a lot,” Bass noted. “It has everything.”
Another mall, Rockaway Townsquare, recently obtained a use variance from Rockaway Township to allow the Water Circus, a Cirque-du-Soleil-type extravaganza, to perform for a week in the mall’s parking lot. Jason Rittie, a real estate lawyer in Denville, who helped secure the variance, says municipalities generally welcome pop-up events “because they want to still have these malls as vibrant taxpayers.”
Rittie also worked with Rockaway Township to change the local zoning to allow open-air restaurant seating at Rockaway Townsquare, a trend he sees in other malls as they try to cash in on America’s appetite for foodie experiences.
Indeed, trendy eateries are turning up in mall locations where Cinnabon and Nathan’s once reigned. These include Iron Chef Jose Garces’s Distrito, which opened in 2014 in the Moorestown Mall, and Bobby’s Burger Palace, operated by celebrity chef Bobby Flay, which has three New Jersey mall locations, including Princeton’s Marketfair Mall.
“Marketfair has been completely redesigned to have more food accommodations,” says Onder. These include the wine bar and grill Seasons 52, the Caribbean restaurant Bahama Breeze, and the upscale, down-home Corner Bakery Cafe. The hope, says Onder, is that “if you go there for lunch or dinner, you’re most likely going to walk out in the mall and do some type of shopping.”
Joseph F. Coradino, CEO of Pennsylvania Real Estate Investment Trust (commonly known as PREIT), the owner of 21 U.S. malls, including Cherry Hill and Moorestown, notes that 75 percent of the company’s newest leases represent “the new mall experience,” including health and wellness, dining and entertainment.
Other burgeoning categories include off-price shopping (exemplified by high-end outlet mall Jersey Gardens in Elizabeth) and fast fashion. In the latter category, retailers like Zara and Topshop scoop up trends from the catwalk and rapidly transform them for the everyday consumer.Click here to leave a comment