Demolished Sears at Phillipsburg Mall causes frustration, rumors
More than a year ago, part of the roof from the vacant Sears collapsed at Phillipsburg Mall. Significantly more of the store is on the ground today, courtesy of excavators that have been plucking at the old retail relic, with the cinder blocks, wiring and metal used to build it three decades ago now in mounds.
This was an expected next chapter for the beleaguered shopping center, after the mall’s owner in March told The Morning Call that Sears would likely be demolished as they weighed a redevelopment, joint venture or sale at the property.
“We’re still exploring those options, and we hope to be able to make some announcements soon,” Mason Asset Management President Elliot Nassim said then. “We’ve come to the conclusion that this site is better suited as something other than a mall.”
But five months later, Mason Asset and partner Namdar Realty Group have yet to provide further details, leaving host communities Pohatcong and Lopatcong townships frustrated, and the mall’s remaining tenants to swirl rumors about a possible sale or whether Sears will be the last structure demolished. Neither Mason Asset nor Namdar Realty, major shopping center landlords based in Great Neck, Long Island, responded to inquiries seeking comment for this story.
“There’s just a total lack of communication between the owner and the township,” Pohatcong Mayor David Slack said. “I’ve never talked to them personally.”
In Lopatcong, which is the township where Sears was located, Mayor James Mengucci said he didn’t hear about the store’s demolition until Wednesday, though the work started before that. The mall did receive a demolition permit in mid-July for Sears, a document that estimated the cost at $100,000.
“I’ve heard nothing,” he said. “I would expect at some point they’re just going to shut it down.”
But that still remains unclear. While the mall’s management office did not respond to emails and its extension on the mall’s main number said it was not in service, a pro wrestling event is scheduled for Saturday afternoon at the shopping center. In addition, some of the remaining tenants say they’re busy, including Black Rose Antiques, an anchor along with Kohl’s.
When The Morning Call called Spin Me Round, which buys and sells records, CDs and DVDs at the mall, a woman answered and said, “We’re doing fantastic,” before wishing a reporter “the best day ever” and hanging up without providing her name.
The mall does, however, remain plagued by vacancies. Once the Sears is totally demolished, the center’s gross leasable area will drop from 577,000 square feet to about 467,000 square feet.
According to leasing materials from Mason Asset, current as of July, there are about 25 tenants at the mall, leasing almost 205,000 square feet — more than 168,000 square feet of that filled by Kohl’s, Black Rose and Gold’s Gym.
That’s consistent with Namco Realty LTD’s annual report, which showed Phillipsburg Mall’s occupancy rate at 37% as of Dec. 31. Namco Realty, the vehicle by which Namdar raises money by issuing bonds on the Tel Aviv Stock Exchange, also reported Phillipsburg Mall had negative cash flow and recorded a net operating loss at the end of 2018.
Losing money is not something the mall’s owners are accustomed to. For example, one strategy it touts to investors in Israel is monetizing a shopping center’s real estate. It accomplished that at Phillipsburg Mall, by selling off four outparcel restaurants for a total of about $5.3 million between December 2014 and September 2015. Three of those establishments — Chickfil-A, Panera Bread and Starbucks — remain open, while the Friendly’s closed late last year and is listed for sale for about $1.1 million on Marcus & Millichap’s website.
Another part of Namdar’s strategy is to lower real estate taxes, something it continues to attempt in New Jersey Tax Court by seeking significant reductions in the assessed value of the mall.
That’s one of the things frustrating Slack, the Pohatcong mayor. The township also has a redevelopment plan for the site in the works, he noted, but they can’t get any feedback from the owners.
“They’re not people that are bringing anything good to the community,” Slack said, noting the mall property remains a “big black eye.”
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Morning Call reporter Jon Harris can be reached at 610-820-6779 or at jon.harris@mcall.com.