Established 1872 Reprinted from September 18, 2017 www.BankerandTradesman.com

T h e R e a l E s t a t e , B a n k i n g a n d C o m m e rc i a l W e e k l y f o r M a s s a c h u s e tt s

A PUBLICATION OF THE WARREN GROUP Commercial & Industrial

RETAIL REVOLUTION A Hard Look At Mall Sites’ Future Dining, Entertainment Replace Department Stores

BY STEVE ADAMS Maxx, the 41-year-old mall was last reno- changes to the property, the report con- BANKER & TRADESMAN STAFF vated in 2006 and contains a mix of store- cluded. volve or die is the choice for an aging fronts with exterior entrances and an inline “It’s a revolution that’s going on, and a lot generation of shopping malls strug- section. This month’s sale price was $18 mil- of thought has been put into how to make Egling to compete against e-commerce, lion less than the previous owner, Bethesda, this work,” said Robert Buckley, an attor- outdoor lifestyle centers and reinvigorated -based MEPT, paid for it in 2012. ney at Riemer & Braunstein who represents Main Street shopping districts. major retail landlords in land-use permit- On the South Shore, a developer Performance Gap Widens ting. “You’re going to see both large regional plans to demolish the 46-year-old Hanover Incentive to reinvent malls is likely to in- malls as well as the second-tier malls rede- Mall and replace it with an outdoor shop- tensify. The financial performance gap be- veloping themselves as entertainment, rec- ping center called . tween top-tier and class B mall properties reation and experiential gathering places.” Speculation about the future of the Wo- continues to widen, CBRE research indi- burn Mall culminated this month with its cates. Net operating income at regional and The Sears Question $44 million acquisition by Edens. The South super-regional malls was nearly identical at The exodus of traditional anchors such Carolina developer is leading the $295 mil- $5 per square foot as recently as 2010. As as Sears and Kmart – with more than 300 lion redevelopment of Boston’s South Bay of June, regional malls trailed their larger closings announced this year – could be an Center into a mixed-use center including counterparts by nearly $3 per square foot. opportunity for mall landlords. 475 apartments and a 130-room hotel. The reason: smaller malls rely heavily Sears recently sold its Cambridgeside Edens declined to discuss its plans for on slow-growing categories such as depart- store for $55 million to Denver-based North- the property, but Woburn Mayor Scott Gal- ment stores and apparel. Larger properties wood Investors, leasing back the space vin said the company wants to add multi- have had success adding more restaurants, through September 2019. In 2015, it leased family housing as part of a major redevelop- movie theaters, bowling alleys and new en- space within its stores at Burlington Mall ment. tertainment concepts. and Braintree’s to Irish Retail specialists say the 23-acre property “In short, the traditional mall model that retailer Primark. is ready for its next chapter, given its prime was developed nearly 70 years ago is heav- In some cases, the departure of anchors location with an access ramp to I-95/Route ily dependent on categories that are … no has revitalized centers. After J.C. Penney 128 near the I-93 cloverleaf. longer meeting today’s consumer demands,” closed its store, landlord Gen- “You don’t get a better intersection CBRE head of retail research Melina Cor- eral Growth Properties struck a deal with than that, and the key demographics that dero wrote. Wegmans for a 125,000-square-foot super- you look for,” said John Ferris, first vice That points to the need for new business market scheduled to open next spring. president of retail for CBRE/New England. models with a different merchandise mix. “The older department stores have eaten “They’ll look to fully de-mall it and add But landlords’ ability to make those changes up a lot of gross leasable area, and land- food, fitness and entertainment.” are hindered by the length of expiring leases lords in some cases are anxious to get that Anchored by Market Basket and T.J. and anchor tenants’ veto power over major back,” CBRE’s Ferris said.

Reprinted with permission of Banker & Tradesman. This document may constitute advertising under the rules of the Supreme Judicial Court of . 2 B a n k e r & T r a d e s m a n SEPTEMBER 18, 2017

Developer Edens is adding 475 apartments, a 130-room hotel and 12-screen AMC Theatre as part of a $295 million expansion and redevelopment of Boston’s South Bay Center.

Rochester, -based Wegmans’ Apex Center of New England in Marlbor- The Apex Center strategy is nothing revo- growth in Greater Boston triggered a more ough take shape as a potential new business lutionary, Riemer & Braunstein’s Buckley dramatic remake of Medford’s Meadow model. The 496,000-square-foot complex noted. Jordan’s Furniture opened its first Glen Mall. Boston-based New England De- owned by Westford-based RAVentures for- IMAX theater at one of its stores in 2002, be- velopment demolished the inline space goes traditional tenants in favor of indoor fore Amazon emerged as a major threat to last year and is nearing completion of a kart racing, virtual reality arcades, a tram- brick-and-mortar stores. 120,000-square-foot Wegmans scheduled to poline park and quick-service restaurants. Suburban communities are waking up to open Nov. 5. “That shows a little bit of the despera- the vulnerability of outdated malls, which And Simon Property Group’s North Shore tion of the retail end of the business,” said are often one of their largest sources of tax Mall is adding a new “Dining District” in- Peter Montesanto, a senior vice president revenues, and willing to consider alternate cluding Tony C’s, The Bancroft and up to at Colliers International in Boston. “We’re uses, Buckley said. three additional restaurants in a renovation starting to figure out other concepts and go “In my type of work, that’s rare,” he said. expected to be completed next spring. away from straight retail to more interactive “Usually the response is, ‘You want to do stores. The good retailers will survive and WHAT?’” n Is Entertainment The Answer? prosper. The ones that are average are just Developers are watching the $160 million not going to be able to hang on.” Email: [email protected]

Reprinted with permission of Banker & Tradesman. This document may constitute advertising under the rules of the Supreme Judicial Court of Massachusetts.