Friday February 9, 2018

Dying Slow Death: Suburban Malls on Downward Spiral

Great Northern, Shopping Town wilt under online competition
By Ken Sturtz

    In their heyday, Great Northern and Shopping Town malls attracted an endless stream of people who fought for prime parking spots, hunted for sales at department stores and waited in long lines for their children to meet Santa Claus.


    But the suburban shopping malls in Clay and DeWitt have suffered a long decline as tenants have pulled out and shoppers waned.


    What is driving the decline and what might the future hold for Great Northern and Shopping Town malls?


    “Retail across the board is changing for sure and I think the Internet is the biggest driver,” says Robert Doucette, a developer who teaches real estate development at Le Moyne College and Syracuse University. “That’s a big chunk of sales.”


    Online retail has continued to grow and eat away at traditional brick and mortar retail. But the rise of online retailing is only a partial explanation. Many shopping malls – Penn Can Mall in Cicero, Tri-County Mall in Baldwinsville, Fayetteville Mall, Camillus Mall – struggled, were redeveloped or disappeared altogether long before the internet began eating into retail.


    “There used to be malls everywhere,” says Clay Town Supervisor Damian Ulatowski. “Now there are skeletons of those left and the others are gone. There’s not even a footprint of them anymore. It’s sad to see that happen.”


    Experts long said Central New York had too many malls, as did much of the country. When Carousel Center was proposed 30 years ago critics asked if the community could support another, even bigger shopping mall.


    A stagnant population and a steady stream of large companies and jobs moving out have plagued the region.


    “There’s just so many retail dollars in the region,” Doucette says. “Perhaps there are just too many retail places for the buying power we have in Central New York.”


    Poor management almost certainly had a hand in the decline of Great Northern and Shopping Town as well.


    California-based mall owner Macerich, which owned both properties, did little to revitalize them. The company ended up walking away from Shopping Town in 2011 and Great Northern in 2015.


    Many experts have also pointed to competition from other malls, especially newer shopping malls, as a reason many older properties have struggled or folded. Great Northern opened in 1988. Shopping Town dates to the 1950s, but was enclosed in the 1970s.


    The suburban shopping malls scattered across Central New York had begun appearing as retail shopping in downtown Syracuse faded. Then, in 1990, the mall that eventually became Destiny USA opened in Syracuse.


    “They affected some of the other malls here,” Doucette says.


    Exactly how much Destiny USA affected older, smaller malls is hard to say. Ulatowski believes Destiny “sucked the life” from ShoppingTown, Penn Can and Great Northern.


    Ulatowski says he thinks Great Northern hung on longer because it drew a fair share of its shoppers from the northern suburbs and Oswego County. He still goes to the mall regularly, but says on a recent trip it was impossible not to notice the vacancies.


    “I don’t think we’re ever going to get back to what it was,” he says. “There’s nobody that’s going to pull a rabbit out of a hat and reinvigorate Great Northern Mall as a shopping center. It’s going to have to be re-imagined.”


    What the reimagined space might be is anyone’s guess, Ulatowski says, though he could see it being converted into senior living or office space.


    Mike Kohan, owner of Kohan Real Estate Investment Group, bought Great Northern last year for $8.5 million. His company, which owns about 20 malls, specializes in buying troubled malls and turning them into mixed-use spaces.


    Kohan did not respond to phone messages, but his website hints at a strategy of redeveloping malls into mixed-use space. That strategy would be in line with a growing trend in the shopping mall business away from the traditional model of mostly retail.


    “Entertainment and dining and experiential, that’s what people are craving,” says Joseph Castaldo, of Pyramid Management Group. “You need to give people a multitude of reasons to come to the property.”


    Mall developer Pyramid, which owns Destiny USA, has been ahead of the curve for years in moving toward more tenants outside of retail, Castaldo says. Its rebranding and expansion of Destiny, which opened in 2012, included restaurants and businesses offering entertainment and experiences.


    Everything from bowling alleys, IMAX theaters, and go-cart tracks, to trampoline centers, ropes courses and fitness centers have entered Pyramid-owned malls, Castaldo says.


    “And now we’ve taken it one step further by adding hospitality,” he says.


    Pyramid recently opened a 209-room hotel across the street from the mall. The developer is constructing a 192-room hotel at its Crossgates Mall property in Albany.


    Some space in Shopping Town, which recently lost its last food court tenant, is already filled with non-retail uses such as gyms and clubs. But its future remains uncertain. Its owner, Moonbeam Capital Investments, did not respond to phone messages.


    The company has experience revitalizing malls and attracting non-retail tenants.


    Moonbeam was said to be finalizing plans a year ago to repurpose the mall with office, education or health care tenants. At one point the idea of a call center was floated.


    But plans for redevelopment have yet to materialize and the mall remains in limbo.


    Doucette says a property such as Shopping Town will almost certainly find a new use of some kind eventually because of the heavy traffic in the area.


    “It’s a prime location,” he says. “Could that be repurposed? Absolutely.”