The new owners of the Bangor Mall will have to be creative if they want to keep the shopping center viable in an era of increasing competition from online retailers.
Mason Asset Management, Namdar Realty Group and CH Capital Group — a trio of real estate investors based in Great Neck, New York — negotiated the sale price of the mall after it went up for auction last February but no bidders met the reserve price. They closed the sale last month for $12.6 million, or slightly more than half the property’s assessed value of $24.7 million.
So far, it’s unclear what their plans are. They have not responded to the BDN’s request for an interview and tenants of the mall said they have not directly heard from them.
The Bangor Mall has recently gone through several years of turmoil in which some large stores closed, a city appraisal found its property value dropped 22 percent in one year and its former owners defaulted on an $80 million loan.
Some of those financial challenges can be attributed to the rise of e-commerce companies such as Amazon.com Inc., which have brought stiff competition to brick-and-mortar stores and accounted for most of the retail industry’s growth in recent years, according to Jerry Sheldon, a retail analyst at the firm IHL Group.
But mall operators have also brought some of the “self-induced trauma” onto themselves by restricting the ability of their retail tenants to adopt digital technologies that are necessary to compete in the changing marketplace, according to Sheldon.
The store-based retail industry is still strong in many areas — besides the vacancies at the Bangor Mall, the Stillwater Avenue shopping corridor otherwise has high occupancy at the moment — but if mall owners want to compete, they must focus on attracting tenants that will increase foot traffic inside the mall, Sheldon said.
He pointed to Kohl’s as an example of an innovative department store that has begun partnering with Amazon to allow in-store returns of clothes that have been ordered online, which can in turn lead shoppers to buy other things in a physical store. He also noted that malls are now forced to look at non-retail entities, such as theaters and alternative schools, as potential tenants.
By bringing in that traffic, mall owners can start to afford the physical upgrades that are also important to attracting customers, according to Sheldon.
“That’s really what it boils down to: how creative are you willing to be, how willing are you to change your historical business models in an effort to drive traffic,” he said. “You can’t do it all at once. The reality is the costs are too large. You can’t take 20 years of a lack of maintenance and lack of improvement, and rectify that in a couple of years. There’s just not enough capital to do that. It’s about incremental changes.”
Bangor officials would like to work with the new owners of the Bangor Mall to attract new tenants to the 88-acre property off Stillwater Avenue, but they have so far not responded to the outreach of city officials.
“If outdoor restaurant seating is an issue, we can work with them on zoning,” City Manager Cathy Conlow said. “If there are things they’re interested in doing that may not be allowed [under the city’s current zoning], I’d love to try to find ways to make that mall more usable for them and give more offerings for residents.”
At the same time, some local officials and current tenants have said they would like the parking lot and private access road around the mall, Bangor Mall Boulevard, to be repaired. They contain dozens of potholes, but the mall is responsible for repairing them.
The potholes “really are horrible,” said Julie Lisnet, a founding member of Ten Bucks Theatre Co., a local theater company that became one of the mall’s less conventional tenants when it opened a performance space there early this year. “We can deal, but I definitely think it’s kind of a detraction.”
Last year, Reuters reported that two of the Bangor Mall’s new owners, Mason and Namdar, have quietly become some of the nation’s biggest mall landlords by purchasing a mix of malls, including those that are in need of redevelopment.
Some tenants and local officials have complained that the firm doesn’t heavily reinvest in its properties, but Namdar President Igal Namdar told Reuters, “When you own 100 retail properties, of course you’re going to have people having complaints … if there are issues, we deal with them.”
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