Shoppers boost Danbury mall’s business in 2018
Danbury Fair increased both its retailer occupancy rate in 2018 as well as sales receipts produced by those stores, while bracing itself for a small wave of bankruptcies in the wake of the holiday shopping season.
Retail sales at Danbury Fair mall were up 2 percent last year, as reported on a sales-per-square foot basis by mall operator Macerich.
The mall closed out the 2018 holiday season with a 96 percent occupancy rate, up from 92 percent at the close of 2017. But hanging over it all is the ongoing uncertainty of Sears, with Gymboree and Things Remembered now undergoing bankruptcy clearance sales in Danbury.
“Typically the first quarter is bankruptcy season,” said newly promoted Macerich CEO Tom O’Hern, during a Thursday morning conference call reviewing the company’s 2018 results and this year’s outlook. “They defied that a little in 2017 where it seemed to go throughout the entire year. … We do expect to see more this year.”
Danbury Fair totals nearly 1.3 million square feet of space, with major mall anchors including JCPenney, Lord & Taylor and Macy’s; and smaller pads occupied by Dick’s Sporting Goods, Forever 21, Primark and Sears. As of December, Macerich was carrying $202 million in debt on the property that reaches maturity in October 2020.
On Thursday, a federal bankruptcy judge approved a $5.2 billion bid for the hedge fund controlled by Sears Holdings chairman Edward Lampert to take the retailer private, with Lampert having vowed to keep the company’s remaining 425 U.S. stores open.
In 2015, Macerich invested $150 million into a joint venture alongside Sears to own nine stores, including the Danbury Fair Sears, in a deal that paved the way for the European discount apparel retailer Primark to take over excess space as Sears downsized.
The Sears at Danbury Fair is just one of three still open of those original nine. O’Hern said this week that the company has plans in place to redevelop those spaces at a potential cost of at least $250 million, whether splitting them up as Macerich did more than a decade ago in Danbury with its former Filene’s space to accommodate Dick’s, Forever 21 and others, or demolishing them for fresh uses.
In Paramus, N.J., Brookfield Property Trust is in the process of converting a former Sears into a Stew Leonard’s grocery store, with the chain having its flagship store in Norwalk and another on Federal Road in Danbury.
O’Hern said on Thursday his real estate investment trust has been preparing on the assumption that Sears would, as of February, reject making any further lease payments, but the judge’s approval later that day would appear to have given Sears and by extension its landlords a reprieve.
O’Hern also referenced another of Macerich’s larger retailers that would be downsizing its space, without offering any confirmation to one analyst’s comment that the industry is expecting such a move from Forever 21.
“It remains to be seen how quickly we will get some of these stores back,” O’Hern said. “The three tenants that filed bankruptcy in the last two weeks — Gymboree, Charlotte Russe and Things Remembered — collectively have 90 stores with us. We’re not sure how many of those stores will close or how much rent concession will be requested by those tenants, and those could all be (in the) first half of the year.”
Alex.Soule@scni.com; 203-842-2545; @casoulman