By Lisa Eckelbecker
Telegram & Gazette Staff
WORCESTER – When it opened in 1987, the Greendale Mall was swamped with crowds.
Fast forward 29 years, and the shopping center, tucked next to a busy stretch of Interstate 190, is mostly quiet, dated and dotted with vacancies.
It’s also ripe for the taking.
Lender Capmark Finance Inc. is foreclosing on owner Simon Property Group of Indianapolis, and the mall, valued at $14 million by city officials, is slated to go up for auction May 26.
Retail property owners are showing interest in the 21-acre shopping center, according to the auctioneer handling the sale. But at a time when shoppers are buying more online, shifting purchases to more modern outdoor centers and looking to malls for dining and entertainment, it’s unclear whether the Greendale Mall can continue without big changes.
"It feels like no one’s paid attention," said Ani Collum, a partner and retail consultant with Retail Concepts of Norwell, a consulting firm. "I think there has to be a new approach, and that value is really in the land."
Malls have not had an easy path in recent years. Massive enclosed spaces typically surrounded by garages or vast parking lots, they’ve lost business to newer outdoor "lifestyle centers" featuring movie theaters, restaurants and a mix of stores.
The Great Recession and sluggish recovery also ravaged the retailing industry, forcing some chain stores that are stalwarts of malls to scale back.
In addition, although most purchases still take place in stores, consumers have shifted some purchases away from bricks-and-mortar stores to online sites such as Amazon.com Inc.
Still, malls in the Boston area, including Worcester, generally have low vacancy rates, according to CoStar Group Inc., which tracks commercial real estate across the country. During the first three months of this year, 40 Boston-area malls posted a vacancy rate of 2.4 percent. Three malls in the Worcester area had a vacancy rate of less than 1 percent, CoStar reported.
Malls rarely fail, but when they do, it’s usually because the surrounding region has changed so much it can no longer economically support the mall’s businesses, bigger and better competition emerges or an owner can no longer update the property, said Jesse Tron, a spokesman for the International Council of Shopping Centers.
Turning around a troubled mall could involve converting it to an outdoor center, adding different kinds of commercial space such as offices or even adding housing. Mr. Tron said solutions need to address underlying problems.
"If it’s putting money in, that’s what happens," Mr. Tron said. "Sometimes it’s just tweaking and reinventing."
At 309,000 square feet, the Greendale Mall is smaller than its regional competitors. It also lacks the dining and movie theater that shoppers can find just 8 miles away at the Shoppes at Blackstone Valley, a Millbury lifestyle center that opened in 2004.
The Greendale Mall’s anchors depart from standard mall offerings, too, according to Michael C. O’Brien, principal of Galaxy Development LLC of Auburn, which has been tapped to redevelop an old Worcester Regional Transit Authority bus garage on Grove Street into a 6-acre shopping plaza. The mall’s anchor stores are clothing and home accessories store T.J. Maxx, electronics retailer Best Buy and the discount clearance chain Big Lots.
"Those aren’t anchors that drive a lot of shopping to that mall," Mr. O’Brien said.
Still, the mall’s foreclosure is bringing out interested parties, primarily entities from the New England and New York region, according to auctioneer Daniel P. McLaughlin of Daniel P. McLaughlin & Co. LLC of Boston.
"We’re hearing from just about everyone, but it’s mainly people who own shopping centers," he said.
It helps that interest rates are low and lenders are plentiful, factors that could help a developer secure financing to buy and redevelop the Greendale Mall.
"This story was drastically different six years ago, seven years ago," said Mr. Tron of the shopping center council. "Now people have access to credit and capital. … If they see value there, they are going in and working on those types of projects."
[Read More...]