Jon Harris/The Morning Call - Back in January 2013, Pennsylvania Real Estate Investment Trust unloaded the 577,000-square-foot Phillipsburg Mall for $11.5 million. Its anchors were J.C. Penney, Sears, Bon-Ton and Kohl’s.
Fast-forward to today. J.C. Penney closed in 2014, and Black Rose Antiques and Collectibles finally filled the space more than two years later. Sears shuttered there last month — but not before the store was featured as the lead example in a November story by The New York Times to show the challenges confronting brick-and-mortar retailers. In addition, Bon-Ton will close its roughly 65,000-square-foot store there sometime in the next few months.
Kohl’s is still there and does well, but the impending loss of another anchor has the mall’s owner, Mason Asset Management of Great Neck, N.Y., mulling over the shopping center’s future.
“We are considering all options at this point,” Mason Asset President Elliot Nassim said Tuesday. “We are looking at all alternatives, whether it’s us redeveloping it, a sale or a joint venture.”
Nassim said the company still believes the mall is well-situated with a great location, on the border of Pohatcong and Lopatcong townships and near Interstate 78. But soon having two vacant anchor spaces, he said, creates an opportunity for redevelopment, a wide-ranging term that could mean a host of things at this point. Nassim confirmed one option could involve knocking it down and rebuilding, but it’s far too early to know what will ultimately happen to the mall.
But this much is clear: Its future is up in the air.
The mall’s real estate, however, has value, noted retail expert Jeff Green, owner of Jeff Green Partners in Phoenix.
“The value of Phillipsburg Mall is the ground on which it is located, not the physical asset of the mall itself,” Green said. “Its strategic location on the interstate makes it a valuable piece of real estate.”
The Phillipsburg Mall’s predicament is far from rare nowadays, especially at a time when click-and-order continues to chew up a larger portion of all retail sales. For one, the department store chains that have long called malls home are scaling back and closing underperforming locations in an effort to right-size their brick-and-mortar footprint while attempting to grow online sales. That trimming in a dramatically over-stored environment usually hits the smaller malls in secondary markets first, such as Phillipsburg Mall. One report, released last year by Credit Suisse, estimated between 20 to 25 percent of U.S. malls will close by 2022.
The Lehigh Valley and the surrounding area already have seen some of the changes.
For one, the Schuylkill Mall near Frackville — another mall that PREIT unloaded — is being demolished to make way for a new use: industrial buildings. Other area malls are trying to adapt to survive. For example, the Palmer Park Mall is working to create more exterior entrances at the Palmer Township shopping center, and South Mall in Salisbury Township is under the control of a hands-on ownership group that is busy making improvements, adding local businesses and hosting community events.
Both Palmer Park and South Mall also were unloaded by PREIT, a company that has a strategy of weeding out the underperforming malls in its portfolio.
As for Phillipsburg Mall, it had a non-anchor occupancy rate of 66.1 percent and sales of $235 per square foot as of Sept. 30, 2012, one of the last public disclosures on the mall before PREIT sold it to Mason Asset, a company that has more than 90 properties across more than 20 states. Nassim did not have more updated figures handy Tuesday.