Landscape of state’s malls changing as 5 sold
Four of Connecticut's 10 largest shopping malls have sold in the past fourand-half years and a fifth is likely to change hands after being auctioned off this past week.
The recent online auction of the Crystal Mall in Waterford was just the latest shift in ownership of malls around the state. The winning bid was $9.25 million and the listing on Crexi, the commercial real estate platform where the online auction occurred, says the mall has been “sold subject to seller approval,” although the listing does not identify the buyer.
The other four Connecticut malls that have changed hands since 2018 are:
The former Enfield Square Mall, which was sold via auction in December 2018 for $11 million to the Long Island, N.Y.based Namdar Realty Group.
The former Meriden Square Mall was sold in June 2020 for $12.5 million, also to Namdar.
Waterbury's Brass Mill Center, which was purchased by Kohan Retail Investment Group from Great Neck, N.Y. as part of a larger $44.9 million retail center in April 2022.
The former Westfield Trumbull Mall, which sold for $195 million over the New Year's Day holiday weekend to Namdar as part of a larger retail property sale at the start of this year.
The slow demise of bricks-and-mortar retail in the United States over the years has been well documented. But for a small state like Connecticut, the pace of mall sales represents a real sea change.
A variety of factors seems to be triggering the sell-off, according to retail and economic experts.
“The financing for these malls was done decades ago before rising interest rates,” said Burt Flickinger, managing director of the Strategic Resource Group, a New York City-based retail consultant. “Leases are coming due and and the current mall owners don't want to get financing at higher rates. And they're not sure they can get higher rates from tenants.”
John Clapp, professor emeritus of real estate at the University of Connecticut, said the number of mall sales over the past few years in Connecticut shows “there's an oversupply of mall and shopping centers in the state.”
“Connecticut is a slowgrowth state,” he said. “There's not enough growth out there to support the amount of retail that is still being built.”
Another factor in the amount of ownership turnover at Connecticut malls is what Clapp describes as “a reduced ability to fill large anchor spaces” in malls.
“The JCPenney and Macy's of the world are in a retrenchment mode,” he said.
Some traditional mall anchors, like Lord & Taylor, have disappeared entirely. Sears, another frequent anchor of malls in years gone by, has just 22 stores left in 14 states and Puerto Rico.
“There's a short list of retailers that are expanding,” Flickinger said. Some of the retailers that are still expanding, like Target and WalMart, typically don't do mall-based stores, he said.
Donald Klepper-Smith, an economist with South Carolina-based DataCore Partners, said anchor stores serve a very specific purpose in shopping malls.
“They expose you to other retailers,” he said. “And that serves as an economic multiplier for the entire mall.”
Flickinger said that once the occupancy of a mall reaches less than 75 percent full, it is typically no longer considered financially viable.
Clapp said the prices at which Connecticut malls have been sold “are so cheap that the buyers can afford to hold onto them for a long time” without making dramatic improvements to the property or significantly increasing occupancy levels.
“It's what is called holding for an option,” he said. “The buyers are able to generate enough income from a mall's remaining tenants and get enough reductions in property taxes that these properties remain profitable for quite a while. They are holding on until some good future option presents itself.”
David Cadden, a professor emeritus at Quinnipiac University's School of Business, said some mall buyers “are people looking for a good deal on prime real estate” who don't necessarily plan to restore the economic health of the retail property.
“Then there are buyers who say ‘I'm smarter the guys that were operating this and if we can only change a few things, this property could be successful,' ” Cadden said. “There's no shortage of that type of buyer.”
Klepper-Smith said retail, more than any other sector in the U.S. economy, “has undergone the largest amount of changes,” both pre-and-post pandemic.
“The whole sector has been modified by e-commerce and inflation,” he said. “With the inflationary environment that we now have, every dollar counts.the nature and the current nature of consumption is that consumers are being a little more thorough about how their money gets spent and where.”
There are two clearly defined types of shoppers, Klepper-Smith said.
There are transactional shoppers that are strictly looking for the best deal and don't care how they get it. The second type, he said, is the experiential shopper.
“Some people just want a good deal and people going online have a good idea of what they want,” Klepper-Smith said. “But at the same time, there are people want to see, smell and touch what they are purchasing. The shopping experience is still a valid exercise, but people are going to be look for that unique experience.