Many people think dying malls should be torn down and housing built in their place, but the process still often takes years
By Kate King
Updated Dec. 6, 2022 5:48 pm ET
The long-decaying White Plains Mall is dead and buried, with developers set to break ground this week on the first phase of a $650 million project to build hundreds of apartments in its place. It is an outcome that is widely welcomed but has taken years to come to fruition.
There is no shortage of dying malls in the U.S., where aging shopping centers, in particular, have declined due to changing shopping habits, e-commerce and competition from newer malls. These large, well-located properties attract interest from developers, and town officials are typically eager to see them revitalized.
But converting enclosed shopping centers remains a difficult feat. About one-fifth of the malls that have fully closed since 1992 remain standing without a redevelopment plan in place, according to Green Street, a commercial real-estate analytics firm.
In White Plains, a suburb of New York City, the former owner of the White Plains Mall, several developers and the city’s elected leaders long wanted to tear it down and build housing. The 170,000-square-foot, two-level shopping center was built in the early 1970s and sat on prime real estate two blocks from the city’s Metro-North train station, which delivers commuters to Manhattan in about half an hour.
“There was no question that there was interest in the property,” White Plains Mayor Thomas Roach said. “It was just a question for the owners to figure out how to move forward.”
Nick Egelanian, president of retail advisory firm SiteWorks, which tracks U.S. mall performance, said cost and complicated ownership structures are the main impediments to redeveloping dying malls. Tenants operating in the malls need to be bought out, an expensive and lengthy process, and securing ownership of the property often involves negotiation with multiple parties.
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Many communities are eager to see malls redeveloped into housing, but building residential units is expensive, particularly now as interest rates rise, Mr. Egelanian said.
“I think if you blink and open your eyes in 20 years, most of these malls will be gone, redeveloped into projects with a heavy emphasis on housing,” he said. “But it will be like watching paint dry between now and then. It’s a slow and expensive, halting process.”
The White Plains Mall was built with the intention of returning retail to the city’s downtown, where major development in the 1960s pushed out mom-and-pop businesses and apartments to make way for large office towers, the mayor said. Many of these displaced small businesses moved into the mall after it opened, including a hardware store, shoe repair and an optician. A midsize supermarket and restaurant that drew after-work crowds later opened.
But two other malls were later built nearby, and the White Plains Mall suffered due to competition and age. In recent years, the mall’s owner brought in a dialysis center and the Department of Motor Vehicles, but the property was plagued by increasing vacancy, mold and other maintenance issues, Mr. Roach said.
“It was past its useful life,” he said. “It was fading.
Eon Nichols, an attorney who represents the owner, a family company doing business as W.P. Mall Realty LLC, said that his client ran the mall with the goal of keeping tenants happy and took care of the building’s repair and maintenance needs.
Recognizing, however, that the property was outdated and that the property was better suited to housing, its owner proposed in 2016 razing the mall and building hundreds of apartments as well as street-level retail and restaurants. It took two years to obtain zoning approvals from the city and payment-in-lieu-of-taxes agreements with the county’s industrial development agency, Mr. Nichols said. W.P. Mall Realty then embarked on figuring out the project’s debt and equity structure.
Westchester developer Louis Cappelli got involved with the project in mid-2020 and brought RXR onboard soon after. The partners made the development economically feasible by breaking it into two phases, with RXR acquiring the land for the first phase for $40 million and Mr. Cappelli buying the land for the second phase for $28 million.
Earlier this year, the state of New York approved the project for at least $10 million in tax credits given to developers that clean up former contaminated properties known as brownfields. The tax credit was critical to moving the project forward, RXR said, and demolition of the mall wrapped up last month.
On Thursday, RXR will break ground on the project’s first phase, which will cost $350 million and includes two of four planned residential buildings. The first phase is scheduled to wrap up in early 2025, according to the developer.
The full development plan calls for 860 multifamily units, 80,000 square feet of retail and commercial space and publicly accessible open space.
RXR was interested in the project in large part because of the property’s proximity to the train station, Chief Executive Scott Rechler said. The developer has worked extensively in the New York City suburbs but said this marks his first redevelopment of a former mall due to the high costs involved.
“You really want to be able to buy this for almost the equivalent of land cost,” Mr. Rechler said.
Write to Kate King at firstname.lastname@example.org
Appeared in the December 7, 2022, print edition as ‘Replacing Dead Malls Can Be a Struggle’.
A rendering of the apartments planned on the former site of a 1970s-era mall in White Plains, N.Y.PHOTO: MDEAS ARCHITECTS
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