PREIT on the hunt to replace Macy's at three regional malls

Suzette Parmley/The Philadelphia Inquirer - Pennsylvania Real Estate Investment Trust, which owns several malls in the region, is fishing for "replacement tenants" for its Macy's stores at Plymouth Meeting, Moorestown, and Altoona malls.

 A list being circulated among top commercial real estate firms has these three stores listed, according to brokers.

A PREIT representative did not deny the report and declined to cite reasons Thursday for seeking replacement stores for the three Macy's.

Top brokers speculate that those three stores are among the 100 nationally that Macy's Corp. wants to close by early 2017 as it seeks to downsize its stores and grow online sales.

Macy's announced the pending closings last month and said that a list of the locations would be made public after the Christmas shopping season.

This process is known in the real estate industry as "offering out" stores by a landlord to gauge interest.

Traditional department-store anchors, such as Macy's, Sears, and the Gap, have been battered by online competition and have focused on paring physical stores in the last few years. Many of these stores sit on prime real estate and could command high rents.

Steven H. Gartner, managing director for retail services at CBRE Inc., said the three Macy's - including at the Logan Valley Mall in Altoona - are in well-established retail sites.

"So if they become re-tenanted, it could be a net positive for a mall," he said.

"That is the case of the former Sears at King of Prussia Mall that became a Dick's, Primark, and restaurants.

"Replacement retailers that are more popular can result in more traffic."

Dan Brickner, principal at Metro Commercial, based in Mount Laurel, who represents the entertainment and dining firm Dave & Buster's, said the closure of Macy's stores represents "opportunities to drive traffic to these malls that traditional department stores haven't been doing.

"There are great opportunities if [PREIT] gets them back [in the company's portfolio].

"The question that struck me is what are the best uses for those spaces? There is a lot of pent-up demand for big boxes, but there is not a lot of new construction" due to high construction and land costs and what tenants are willing to pay.

"With the closure of Sears and Macy's, malls have done a good job with more nontraditional uses, and that sometimes entails just demolishing them. You have the benefit of the parking lot and the ability to build your box like the Wegmans in Montgomeryville at Montgomeryville Mall," he said.

"Mall shopping is changing where you need to drive traffic to a lot of these interior malls, and many of them have taken these boxes and added entertainment like a Dave & Buster's.

"It's bittersweet losing a mall anchor, but it's providing an opportunity to fill a void that hasn't been built by big-box traditional developers lately," he said.

"Now the space is there."

Jeff Green, a retail consultant based in Phoenix, said in an email Thursday: "I am not sure this definitely means that these three stores are necessarily on the soon-to-be announced store closure list (especially Moorestown). However, being proactive in a challenged department store market . . . is certainly the best way to hedge these store closure bets."