Former U.S. mall finds secret to survival as Covid tears retail trade apart

Craig Deitelzweig looked like a proud shopkeeper as he watched what was too rare a scene in America’s decimated malls: Crowds of shoppers, many loaded with bags, strolled through the Cross County Center in Yonkers, New York.

Shopping malls have become one of the most contested parts of the real estate industry in recent years, thanks to the rise of e-commerce. The coronavirus emergency is accelerating their decline – so much so that some mall owners are considering converting their properties into e-commerce warehouses.

Yet the Cross County Center, a 66-year-old mall that isn’t terribly flashy or innovative, rumbles as newcomers like the golden Hudson Yards in west Manhattan or the vast and New Jersey’s excessive American Dream are struggling.

After a drop in Covid, its owner, Marx Realty, receives 95% of the rent owed by tenants each month. The occupancy rate is 99 percent. When a flagship tenant, the Sears department store, went bankrupt, Marx signed an agreement in September to replace it with a 130,000-square-foot Target, with a rent increase of almost 30%. Construction on its renovated site begins in January.

For Mr. Deitelzweig, managing director of Marx, the ultimate sign of the mall’s health may be the sight of shoppers – all wearing face masks – lined up outside stores, including jeweler Pandora. Its October sales are up 63% from a year ago, he said. At Gap, they increased by 6%.

“The weather is nice,” he said. “I think people still love to shop. If you look around, almost everyone has bags.

The only dark note from a recent afternoon was a storefront where a lone Santa Claus sat behind a plexiglass screen a safe distance from an elf.

What explains the success of Cross County? It has long benefited from its location in Yonkers, a working-class town sandwiched between New York’s Borough of the Bronx, just to the south, and the wealthy towns further north of Westchester County.

The fact that it’s an open-air mall – once seen as an inconvenience – turns out to be a big plus during a viral pandemic. Several buyers echoed the sentiment of Madeline González, who said she had come from the Bronx to Cross County because she was “tired of being locked up.”

“There was a time when closed malls were the thing and we were considering putting a roof over them,” Deitelzweig said. “Thank goodness we didn’t.”

Ultimately, he attributes the mall’s success to something that is harder to quantify and replicate. Over the decades it has woven into the local community – a place where families come to celebrate graduation, watch the Fourth of July fireworks, or just to see and be seen on a weekend afternoon. end. “It’s really the secret,” Deitelzweig said. “It really is a city center more than a shopping center.”

American Dream Mall in New Jersey contains a theme park, water park and ski slope © Samantha Nandez / BFA.com

Manhattan’s Hudson Yards are part of a giant development including the Vessel tourist attraction © Reuters

A few years ago, Marx considered tinkering with the formula. At the time, the $ 3 billion American dream was under construction and the shopping mall world was being talked about. To attract customers, its owners invested in thrills, launching an amusement park, water park, helipad, zoo and 16-story ski slope, among other things.

“We finally rested and realized we didn’t need this,” Deitelzweig said. “Your main street doesn’t need a giant Ferris wheel to be part of the community. You need coffees.

Marx chose to change the name – abandoning the Cross County Mall to become the Cross County Center.

No matter what you call it, Cross County’s appeal was tested when Covid-19 hit. His April rent collections fell to 44% as New York and surrounding areas went into quarantine. “It was concerning,” said Deitelzweig.

Marx allowed some restaurants and a health club, which were legally required to close, to defer payments. But he otherwise took a hard line. “This is probably your most successful store, so pay here first,” Mr Deitelzweig recalls, telling tenants – many of whom were withholding rent at other locations.

While it might sound harsh, he didn’t apologize. “We really shouldn’t be their lender. We have our own lender who has not provided us with assistance.

Most have paid. Yet Marx is currently suing to evict Gap, which Mr Deitelzweig said had only recently started paying 50% of his rent. The company, he said, was trying “to use the pandemic to evade its legal commitments.”

Gap declined to comment specifically on its location in Cross County. But he said he had been forced by the pandemic to close stores for months, adding: “As we work on the remaining negotiations with the owners to fairly share the burden caused by the pandemic, we have paid what we believe to be fair rent under changing circumstances.

If it is an expulsion, Mr. Deitelzweig is convinced that he will find a replacement. As weaker malls succumb, he expects retailers to pay a premium to move to higher ground.

“If you’re a retailer times have changed and you want to focus on your best locations,” he said, adding, “Retail is not dead. If it’s an area that really speaks to people, emotionally, they come back.


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Peggy P. Gilmore