Toronto Firm Buys Outstate Shopping Centers
Three outstate regional shopping malls have a new owner in the wake of a $15 billion blockbuster real estate deal. Toronto-based Brookfield Property Partners now owns Apache Mall in Rochester, Crossroads Center in St. Cloud, and River Hills Mall in Mankato after its acquisition of Chicago-based shopping mall owner GGP Inc. closed in August. (Brookfield is also the new owner of Ridgedale Center in Minnetonka in a joint venture with another investor.)
As brick-and-mortar retailers face increasing challenges, what does the future look like for such smaller-market malls?
“One thing that’s interesting about those three is they’re all in markets where they’re the only mall and the dominant player in that market,” says John Johannson, senior vice president with the local office of Toronto-based Colliers International and a veteran retail real estate broker.
Annual financial filings from GGP showed all three malls to be nearly full at the end of 2017, with occupancy rates above 95 percent—data that bolsters Johannson’s point.
Johannson, who grew up in Rochester, says that regional malls are magnets for people from a wide radius because there are not many alternatives: “In Rochester, you’re going to the mall,” he says.
Regional malls are nonetheless grappling with struggling retailers. Apache Mall and River Hills have now-shuttered Herberger’s department stores. All have JCPenney locations; the retailer has closed 234 stores in its last five fiscal years.
But the malls in St. Cloud and Mankato also have Target stores among anchors. Minneapolis-based Target Corp. does not disclose statistics on individual store performance, but it has been posting solid sales gains.
There are other strong performers, solid tenants largely unknown to metro shoppers such as Fargo, North Dakota-based Scheels, a regional chain that sells outdoor, sporting, hunting, and fishing gear. (Scheels has 27 stores, including at all the aforementioned malls.)
“Scheels does tons of apparel. … They have some entertainment aspect to it,” says Johannson. “That’s a great draw. … They’re a wonderful anchor tenant.”