Greendale Mall surviving amid store closures, more competition
PHOTOS/GRANT WELKER
The Greendale Mall is more than one year removed from its foreclosure auction, but a high vacancy rate still plagues the shopping center.
After Rue 21 and Payless ShoreSource close, Greendale will have vacancies at 19 of its 44 storefronts.
Robert Baumann, economics professor, Holy Cross
Frank Hoy, business professor, WPI
Janga Samal, an employee at Bling Bling Fashion, got up from his chair where he was putting blouses on hangers to be displayed. No customers were in the store, but he wanted to show just how slow the day had been.
“Look,” he said. A receipt showed the day's total revenue: $45.92. One sale was made, but also a return.
“It's like that every day,” Samal said.
Bling Bling Fashion, a Greendale Mall store selling mostly women's clothing and accessories, is not alone. The Worcester mall is emptier than ever; and as retailers across the country are expected to close thousands of locations this year, Greendale may need an unlikely rebound to avoid becoming another mall that couldn't make it through the online shopping trend.
The mall has survived so far, but it's hard to argue it's thriving a year after it was bought out of foreclosure auction. Of its 44 storefronts, including anchor stores and the food court, 19 will be vacant with the closure of the clothing store Rue21 and Payless ShoeSource. More than 50,000 square feet of retail space will be dark.
A new low for retailers
Most days, just about all a Greendale shopper would hear is the echoing sound of loudspeaker music and the dinging of arcade games at Wow Family Entertainment. Escalators to the food court and DSW are out of order. Store signs of retailers that didn't make it remain, from Aeropostale to Dollar N Things, as odd reminders of what was once there.
The mall's website even seems to address the surprising nature of the property still operating, saying “Yes, We Are Open!”
Shopping malls practically anywhere are facing increasingly difficult challenges, from online retailers, changing consumer habits and rising property costs.
This year could mark a new low for retailers — even worse than the Great Recession. Global financial firm Credit Suisse has projected more than 8,000 retail locations will close this year, about four times as many as last year and far surpassing the roughly 6,000 in 2008.
For malls and shopping plazas anywhere, there are simply fewer tenants to go around.
Retailers have already announced hundreds of planned closures this year. When struggling retailers have decided to close stores, they've often chosen their Greendale Mall locations, including American Eagle and GameStop. Rue 21 and Payless ShoeSource are closing their Greendale Mall stores among about 400 others each is shuttering.
Avoiding the Galleria's fate
One only needs to look about three miles south to downtown Worcester to see a mall whose useful life had ended. Worcester Center Galleria opened in 1971, the same year as Auburn Mall, but suffered in its later years as an outlet store center and closed in 2006.
The roughly 25,000-square-foot Greendale Mall has so far avoided the same fate. It was a year ago this month the bank owning the property bought it out of foreclosure auction for $11.8 million after owner Simon Property Group defaulted on a loan. Only a decade prior, the property was valued at $65 million.
KeyPoint Partners, the leasing agent for the mall, did not return messages seeking comment.
“I hate to be pessimistic about this because I think the city is doing well,” said Robert Baumann, an economics professor at College of the Holy Cross, and one of several experts who expressed hesitancy the mall could have a strong future without a major investment. “I'm just not optimistic about that industry.”
Malls destroyed by other malls
Even though the pervasive assumption is shopping malls have been hurt most by online retailing, that isn't necessarily the case.
Competition from other malls was found to be the most common reason that malls went belly up, according to Wells Fargo Securities, which reported this spring malls built from the 1970s to the 1990s were overtaken by more modern shopping centers with better amenities. Older malls were pushed down the shopping hierarchy, and a tipping point often came when a key anchor closed.
Greendale Mall has survived at least in part, store workers said, on a reliance on residents from surrounding streets, many of them immigrants, who may not have the means, transportation or desire to shop at farther-away malls. Tenants who have stayed at Greendale have done so at least partially because of low and ever-declining lease rates.
Those who've stayed have just held on. Bling Bling Fashion said sales are down 25 percent from last year, and East and West, a store that sells a bit of everything, is down one-third in the past several years.
“Every day, I have customers come in and ask, 'Why are you still here? Isn't the mall closing?'” said Sam Abdel, the owner of Greendale Furniture in the former Old Navy space. He remains confident, at least in the short-term. “This mall can have a future if you invest in it.”
More competition on the way
Competition between malls is nothing new. In 1995, when Auburn Mall was planning a $45-million expansion and plans were unveiled for Gateway Mall, an enclosed shopping mall in Millbury, the Worcester Business Journal called it the “Great Mall Shootout.” Gateway Mall ended up as the outdoor Shoppes at Blackstone Valley, and even after the project opened in 2003, both malls have carried on.
But shopping malls across Central Massachusetts have given residents only more options while retailers have struggled. Presenting a fresh challenge for the Greendale Mall, the retail market will grow starting this summer with the 375,000-square-foot Lakeway Commons on Route 9 in Shrewsbury, and this fall with the 475,000-square-foot Apex Center of New England in Marlborough. Another Shrewsbury shopping plaza, anchored by a Market Basket, is proposed for the former Edgemere Drive-In site on Route 20.
“If you want to be a player in that industry, the ones that tend to win are the newest ones,” Baumann said. “These don't have a very long shelf life.”
“There's a creative destruction with malls,” he added. “This is not a Worcester or a Greendale problem.”
Other area malls have overcome financial trouble or large vacancies. The Mall at Whitney Field in Leominster went into foreclosure in 2010, then filled a vacant Circuit City with Burlington Coat Factory. At Auburn Mall, the former Macy's home goods store is slated to be replaced with Reliant Medical Group medical offices and retail.
Finding a better use
Malls across the country have found new use or rebounded with an infusion of cash.
Wells Fargo looked at 72 shuttered malls and found 23 were redeveloped into other retail uses, such as open-air malls, and 18 others were converted into residential, industrial or office use.
The Wall Street Journal ran a story this month titled, “The Mall of the Future Will Have No Stores,” in which the paper detailed examples such as a Michigan mall where Ford took over a former Lord & Taylor department store for 240,000 square feet of offices.
That may be in line with what could work at Greendale, said Frank Hoy, a Worcester Polytechnic Institute business professor who suggested space at the mall might work as a business incubator.
“We're looking at something that's in a classic need of a turnaround strategy,” Hoy said. “There's an opportunity here for somebody.”
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