OGDEN — When a New York commercial real estate firm purchased the Newgate Mall for $69.5 million, it was difficult not to think, “Uh-oh. Here we go again.”
For many who’ve lived in the area, memories of the Ogden City Mall came flooding back. Built in 1980, that downtown shopping mall was struggling by the 1990s. It changed hands — first to an insurance company, and then to the city — and finally closed for good Jan. 1, 2002. It was demolished that same year, and today The Junction sits on the old Ogden City Mall property.
Plenty of locals worry that, with the Newgate Mall’s sale by Chicago-based General Growth Properties, it’s deja vu all over again. But relax, city officials say. There’s no way this is going to be “Ogden City Mall: The Sequel.”
“I think the differences are that this was not sold under duress,” Bride said. “It’s not one of those deals that’s happening because of a fire sale. This is a generally healthy mall — sold for a good price — that has a great future.”
Newgate Mall had been on the market for at least three years prior to the sale, according to Bride. He said the city has never discussed with the former owners why it was up for sale.
Included in the $69.5 million selling price is Time Equities’ assumption of a $58 million loan on the mall, according to Commercial Observer, a New York City-based real estate weekly. Commercial Observer reports the loan matures in May 2020 and carries a rate of 3.693 percent. At the time the loan was secured, the value of the Newgate Mall was appraised at $83 million.
The selling price for the mall works out to about $98 per square foot. Francis Greenburger, of Time Equities, believes his company got a very good return for a modest price, telling Commercial Observer: “I would say there were times when this same mall would have been valued at $300 a foot or certainly, $250.”
Time Equities was unwilling to discuss future plans for the mall. Ami Ziff, the company’s national retail director, told the Standard-Examiner in an email that they’re “considering improvement plans but nothing has been confirmed at this time.”
Ogden City has had general discussions with the new owners about what’s next, but nothing specific, Bride said.
“What we’re hearing from them is pretty basic,” he said. “They want to take the mall, stabilize it, and look at what opportunities there are in the future to do significant capital improvements.”
Bride said if Time Equities does opt for “significant capital improvements,” the city may be willing to help through a tax increment district that would divert future property tax revenue.
Any problems the Newgate Mall has been having are part of a national trend, Bride believes.
“I don’t see a significant problem with the mall itself,” he said. “I think what we are all looking at is what’s happening nationally. The trend we see is with people buying so much of what they buy on the internet. Those national and international trends are concerns any city would have with their malls.”
However, Bride also believes there are plenty of remedies out there to buck those trends, and he believes shrewd mall developers and maintenance companies are finding ways to compensate.
“They finding very personalized ways of touching people and giving them a shopping experience, and when they do that, they find they are an oasis of success in the desert of retail,” he said. “We anticipate these folks buying the mall are looking at it in the same way.”
Greenburger seems to concur, telling Commercial Observer the reason for Newgate Mall’s relatively low price is due to the increase in online shopping, which has caused a drop in interest for brick-and-mortar retail nationwide. But he hasn’t given up on non-virtual shopping.
“Shopping in America has always been a social experience,” he told Commercial Observer. “And the internet is not a social experience.”
Bride said shopping centers like Station Park in Farmington and City Creek in Salt Lake City “have got it right.” But he also said similar results can be achieved with much, much less.
“You see it at different levels — it doesn’t have to be a multi-billion dollar mall,” Bride said. “It can be fairly simple, but one that the owners really take care of. You can take an old, tired mall situation and — without a lot of costs — turn it around. Enlightened investors find ways to do that.”
Bride hopes to see Time Equities eventually add “significant square footage” to the Newgate Mall, but also said he’s looking forward to the new owners’ perspective.
“I’d like to see what creativity and new ideas this particular investor has,” Bride said. “They may surprise us all with something.”
And to those worried Newgate Mall could be headed for an Ogden City Mall ending, Bride said the city doesn’t anticipate anything other than “good things coming,” based on the new owners’ commitment.
“At this point, they like the mall — they’re excited and energized about it,” he said. “They would not have purchased the mall if they didn’t think it had great potential.”