As the holidays pass and the end of the year approaches, either you or someone you know spent a considerable amount of time in a shopping center. Depending on your neighborhood, shopping preference and ability to travel- chances are you are willing to go some distance to a place that has some combination of entertainment and your favorite retail outlets.
But once in a while, there is a mall that is poorly thought out, their retail tenants are suffering, and require some level of repositioning. I learned of these through the site Dead Malls and I focused on this for a recent real estate valuation assignment.
The subject property is Fashion Center, in Paramus NJ developed in the 1960’s to be the next 5th Avenue.
Fashion Center, was prosperous through the 1970s. But as the years progressed, other malls in the Paramus area, including Westfield Garden State Plaza, Paramus Park, The Shops at Riverside, and Bergen Mall began to capture its local market share. All 4 of these competing malls were further South along Route 17, which meant that motorists and customers had to drive far fewer miles from Manhattan to reach the other competing malls with equally high scale retailers. These malls included a wide variety of high-end retailers such as Bloomingdales, Saks Fifth Avenue, Abraham and Straus (now Macy’s), Sears and Fortunoff. Overall, there was an additional assortment of 70 upscale stores, in more accessible areas South of Fashion Center.
The demise of B. Altman, its largest tenant was a major blow to this development. B. Altman went bankrupt and shuttered its doors in the late 70’s due to poor management and strategy by its current owners. Since then, Fashion Center has been unable to re-lease the space to another equally high-scale tenant. Other retailers followed suit and gradually moved out after their leases, leaving Lord & Taylor as its only anchor store and leading some to refer to the Fashion Center as a dead mall.
This is what Fashion Center looks like today, repositioned as a retail center with no interior mall space.
So, What could have been done differently?
Fashion Center is located on a major route, easily accessible and with good frontage along Route 17. Unfortunately, the competition had access to better locations with better proximity to Manhattan along the exact same route as our subject property.
The BEST alternative action by the owners of this mall would have been community activism to prevent or delay the opening of nearby malls, like Simon Malls did in the Cerro Wire/Oyster Bay Mall proposal. The ability to control the velocity of your competition is incredibly important in the retail landscape. See this website, otherwise known as the gangster opposition from Simon Malls to prevent their competitor Taubman Centers from opening a competing mall No Mall Here.
Everywhere I went this holiday season I reflected on the economics of real estate assets, the effect of every dollar I spent, and how these dollars represented a vote to reinforce the feasibility of these establishments.
These photos you see, strutting about in these pink Hangisi satin pumps were taken from Short Hills Mall in Short Hills, NJ. There isn’t another shopping attraction comparable to this mall anywhere within 15 miles of this location. Perhaps by design, but its an important competitive advantage. Taubman Centers is its current owner and am hopeful they learned some important lessons from their competitors at Fashion Center and Simon Properties.