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, strolling through Yonkers’ Cross County Center, New York.
Shopping malls have become one of the most difficult 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 shopping center 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 on the west side of Manhattan or the vast and over-the-top American Dream of New Jersey are struggling.
After a Covid dip, its owner, Marx Realty, receives 95% of the rent owed by tenants each month. The occupancy rate is 99%. When a major tenant, the Sears department store, went bankrupt, Marx signed a deal in September to replace it with a goal of 130,000 square feet, an increase of almost 30% in rent. Construction on its exquisite location 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 of 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 the New York borough of the Bronx, just to the south, and the affluent 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 to Cross County from the Bronx 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 do it.”
Ultimately, he attributes the mall’s success to something that is more difficult to quantify and replicate. Over the decades it has become woven into the local community – a place for families to come to celebrate graduation, watch the 4th of July fireworks, or just to see and be seen on a weekend afternoon. . “It’s really the secret,” Deitelzweig said. “It’s really a city center more than a shopping center.”
A few years ago, Marx considered tinkering with the formula. At the time, the $ 3 billion American Dream was under construction and was the buzzword in the shopping mall world. To attract customers, its owners have invested in the thrill, joining an amusement park, water park, helipad, zoo and 16-story ski slope, among other amplified attractions.
“We finally sat down 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.
Whatever your name, Cross County’s appeal was put to the test when Covid-19 struck. Its April rent collections fell to 44% as New York City and surrounding areas were in quarantine. “It was worrying,” said Deitelzweig.
Marx allowed some restaurants and a health club, which were legally required to close, to postpone their payments. But otherwise, it took a hard line. “It’s probably your most successful store, so pay here first,” Deitelzweig recalls, telling tenants – many of whom were withholding rent at other locations.
Although it might sound harsh, he was without excuse. “We really shouldn’t be their lender. We have our own lender who has not provided us with relief. “
Most have paid. Yet Marx is currently suing to evict Gap, which Deitelzweig said had only recently started paying 50% of his rent. The company, he said, was trying “to use the pandemic to meet its legal obligations.”
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 through the remaining negotiations with the owners to fairly share the burden caused by the pandemic, we have paid for this. that we believe to be fair rent under changing circumstances. “
In the event of 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 grounds.
“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.