The uncertain future of Rivertown Crossings Mall in Grandville has cast a pall over West Michigan’s retail real estate market, where demand from new entrants is strong but places to put them remain in short supply.
Given the impending closure of the mall’s Younkers department store as parent company Bon-Ton Stores Inc. goes through bankruptcy liquidation and the ongoing struggles of other anchor tenants like Sears and Macy’s, retail industry experts have put the 20-year-old Rivertown Crossings on a list of shopping centers to watch.
“I’d be a little nervous owning that right now, I really would,” said Mike Murray, a senior vice president of retail at the Grand Rapids office of Colliers International Inc.
Rivertown Crossings’ future uses also are complicated by its two-story design, which poses a challenge for redevelopment of the facility. While other owners have “demalled” or bought back leases from struggling tenants, experts don’t see those options happening in Grandville.
A spokesperson for Chicago-based real estate firm GGP Inc., Rivertown Crossings’ corporate owner, did not respond to a request for comment on future plans for the mall.
“There’s some Sears locations where (buying out a lease has) happened, but that’s really only going to be in your absolute top-tier A malls around the country,” said Matthew Mason, a managing director in the Detroit office of turnaround firm Conway MacKenzie Inc. “It’s very difficult to make the numbers work in locations where you’re not going to instantly redevelop that corner of the mall. I’m sure GGP has done that in other markets. I’m not sure this will fit that profile.”
Owners of struggling malls often try to divide the space or bring in different types of users such as office tenants or more entertainment-themed options, Mason said.
“Trying to find another traditional department store to take that place is going to be very difficult,” he said.
TOO MUCH RETAIL?
The complexities surrounding the future of Rivertown Crossings come at a time when retail real estate stakeholders contend the country is quite simply over-retailed.
In a 2017 report, financial services firm Cowen Inc. noted the U.S. had 43 percent more gross leasable area in shopping centers than Canada, the country with the next most leasable space.
Several real estate sources contacted by MiBiz for this report agreed with that analysis.
“You have the retailers or malls that are best positioned that are just going to get stronger, but the ones on the lower end are just going to have to go away,” said Mason with Conway MacKenzie. “There’s just not going to be a market for them.”
Even with the uncertainty over the retail industry amid changing shopping habits and digital disruptions, West Michigan continues to draw new retail inventory and tenants.
Multi-user retail buildings are in the construction or planning stages for some of the region’s hottest corridors such as 28th Street SE and Alpine Avenue.
Moreover, the impending closure of two West Michigan Toys ‘R’ Us locations as a result of bankruptcy creates opportunities to bring new retail users to the market, sources said.
“The retail world is ever-changing and there’s a lot of significant changes that have happened and are continuing to happen,” said Murray of Colliers International. “For people in our world, that can make us a little stressed or make us a little hyper-focused on those things. But at the same time, if something doesn’t change, I don’t know where we’re going to put people. As the trends suggest, the product just isn’t in the market.”