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Shopping Centers Today -> December 2000
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New tactic to revive ailing N.J. center: demalling
By Debra Hazel
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| Among many changes made to revive the Mall at IV: a new exterior with red accents. |
Well, The Mall at IV in Paramus managed. Now, new asset manager Strategic Resources Corp. (SRC) is demalling the project in an attempt to bring a rare dead zone back to life.
“The project was ill-conceived except for its location,” said Brian F. Ricklin, managing director of asset management for New York City-based SRC. The 132,000-square-foot center is located on westbound Route 4, two miles west of Riverside Square. Westfield Shoppingtown Garden State Plaza is 1.5 miles west of the center.
Too small for a mall, too unattractive for a power center and plagued by tenant bankruptcy, the Mall at IV at its lowest point was only 30% occupied. So a total reconstruction is well under way, and what had been a small two-level enclosed center has been opened up into 132,000 square feet. It includes a flagship Macy’s Furniture Gallery, restaurants and smaller retailers.
Even getting control of the project wasn’t easy. The center was developed in 1986 by M. Arthur Halvajian, a private investor who eventually filed for bankruptcy. In 1997, SRC acquired Halvajian’s debt on behalf of investment fund Phoenix 4 Inc. for an undisclosed sum from subsidiaries of Lehman Bros. and the Bank of New York.
Through a series of transactions over the next two years, the firm also bought Halvajian’s remaining interest in a multiproperty portfolio out of liquidation. The Mall at IV was among those properties.
“We now own the long-term leasehold interest. As soon as we did that we created redevelopment plans to maximize the project,” Ricklin said. SRC, he observed, is well-versed in this; some of its other centers include the Mall at One in Philadelphia and West Shore Plaza in Staten Island, N.Y.
The local municipality supported the redevelopment. The Mall at IV looked more like offices than retail, with a nearly solid wall facade, broken only by windows on the second level. The combination of its great location, but poor looks, made fixing the project a priority for the borough of Paramus.
“With 30 million square feet of retail here, this amount is rather small,” admitted Paramus Mayor Cliff Gennarelli. “But we don’t like vacancies, and we don’t like unsightly buildings.”
The center is one of the first that drivers from Manhattan see upon entering Paramus from neighboring Hackensack, and the mall’s unattractive original facade gave a false impression of the affluent Bergen County community. According to the developer, the average household income within a three-mile radius of Mall at IV totals $74,396; within a five-mile radius, the income totals $66,636. The total population comes to 151,069 within three miles, 582,176 within five miles. Adding in the 300,000 drivers who pass through Paramus daily, raising the appearance of the highways has become a priority for the locals.
“We’re sensitive to that. [Previously], you couldn’t tell if Paramus was going up or going down,” Gennarelli noted.
SRC approached the borough with its plans last year, and approvals went through in six to eight weeks, not an unusual period of time, the mayor said.
“We had to really show all our cards to the town of Paramus,” Ricklin said. “But the town has been very excited. They’ve been very happy with the signage,” which had to comply with local zoning requirements.
That still left SRC with a number of problems to fix. Most of the center’s 650 parking spaces were in the rear, and tenants did not have easy access. SRC brought in White Plains, N.Y.-based architect Street-Works, which proposed demalling the project into a two-level stacked center.
“This was literally set up as a mall, with storefronts facing inside. But it was too small. It couldn’t generate enough traffic,” observed Barton Schack, SRC associate director of asset management. Tenants ranged in size from an 800-square-foot lingerie store to a 20,000-square-foot Filene’s Basement.
“When we came, we started with a building in disrepair. People were calling it a ghost town. We started cleaning up right away, to develop curb appeal, concurrent with identifying tenants,” Schack said.
One goal was to take maximum advantage of the center’s 750 feet of frontage along Route 4. All interior entrances on the first floor were turned outside, and the white wall exterior recovered in a muted beige stucco with red accents that draws attention without being gaudy. Exterior construction began during the summer and was scheduled for completion late last month.
“We wanted people’s eyes to be attracted without being wild and outrageous. We picked colors that are subdued but eye-catching and easy to maintain,” Schack said. The move also gave all tenants frontage and signage.
Meanwhile, leasing began in March 1999, and should be a two-year process. The project had suffered several tenant losses unrelated to its ownership problems, including the bankruptcy of Filene’s Basement.
“We had to come to a very simple and clear leasing plan for this asset,” with just two tenants on the second floor, with a small common area between, Ricklin said.
Under the new configuration, the upper level will consist of two tenants: an existing Lenscrafters that remains in its original location, and a 71,000-square-foot Macy’s Furniture Gallery, set to open early next year. The existing mall atrium has been reconfigured into a pedestrian pass-through space, dominated by an escalator that will carry shoppers directly into the Macy’s store.
“The perception in the old days with Filene’s Basement was that this was a minimall concept. This is open, with two exceptions [Macy’s and Lesncrafters] — and they have their own escalator,” said Francis H. Shea, SRC senior leasing manager.
First-level tenants include restaurants Pizzeria Uno and Namaskar, a travel agency that relocated from upstairs and a Jewelry Exchange that has expanded and upgraded. One new tenant is the loan office division of Washington Mutual bank, which ties in well with the home focus upstairs.
At press time, about 29,000 square feet on the lower level remained unleased, including an 8,800-square-feet block that could be subdivided, a 6,000-square-foot slot and a 14,000-square-foot space. Rents typically are running in the mid to high $30s, plus minimal CAM charges now that the center has been demalled.
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