The former Burlington Center Mall, now the Marketplace at
Burlington, hasn't been right for a long time - it's a shell of what was once a
healthy retail center and community draw.
Now, there are not only random vacancies of gated
storefronts, but whole swaths sitting dark and empty. On any given weekday,
security guards easily outnumber shoppers.
Even on a recent Friday at 5:30 p.m., after the work and
school day, it was dead. A half-dozen people sat in the food court and a
sprinkling of shoppers walked around.
The mall has a vacancy rate of 55 percent, far surpassing
the national average for U.S. malls, and for a venue that once housed 100
tenants when it opened in 1982, half have left. Starting next Sunday, the mall
will have only one anchor store, Sears. JC Penney closes for good on Saturday -
joining Macy's, another key anchor that pulled out in March 2010.
From his dual perch in Las Vegas and New York, all the
trouble signs got the attention of Steven Maksin, 46, a mall turnaround
specialist who loves a challenge as much as making money. Like picking stocks,
he spots underperforming malls, buys them cheaply with cash, pumps money into
reviving them, and waits for a return on his investment.
He has had success with malls and shopping centers in Texas
and Colorado.
"I was intrigued," Maksin said of the beaten-down
mall that sits off Exit 47A on I-295 in Burlington Township. He then ticked off
every developer's dream: access points (it's near I-295, the New Jersey
Turnpike (Exit 5), and Route 541; great demographics (population and household
income); and traffic, lots of it.
"He buys these things dirt cheap, because if it was
just the land, it wouldn't be that cheap," said Charles Swain, president
and principal of Colliers International Real Estate Management Services in
Atlanta, who met Maksin last month when the landlord and investor was on an
economic development panel.
Maksin bought a Georgia mall last year. "He buys a
property that's still generating cash flow, and waits to see what the community
needs before he makes his move," Swain said. "I wish I was a
risk-taker like him."
Maybe it's because Maksin's company - Moonbeam Capital
Investments L.L.C. - is based in Las Vegas, where the term all in is
commonplace. But Maksin is definitely all in, to the tune of $230 million, on
top of the $4.4 million he paid to acquire the mall in late 2012.
Starting next spring, here's what Maksin says to expect: a
complete face-lift of the mall's facade; 1.2 million square feet of retail
added to the existing 300,000 square feet; the development of a "hybrid
mall" that combines a traditional, indoor mall with an outdoor, lifestyle
center for shopping, dining and entertainment, including a Dave and
Buster's-type family center, and a hotel. Throw in some water fountains and
benches to rest on in between purchases or while waiting for your reservation
at the dozen new restaurants.
When you have 150 acres, and an additional 50 acres of
"green space" to work with (some of which belong to the Hovnanian
family of Philadelphia), the sky's the limit, said Maksin, Moonbeam's chief
executive officer. Full build-out is expected to take two to five years and to
be done in stages. The mall will stay open the entire time of construction.
"This will be one of the largest and most exciting
projects on the East Coast," Maksin said last week from Las Vegas.
"And most successful."
Moonbeam, a private equity fund that has no debt and doesn't
have to answer to investors, has been on its own shopping spree of late. Last
year it bought four failing malls - Gwinnett Place Mall in Duluth, Ga.; one
near Pittsburgh, called Century III; Shoppingtown Mall in Syracuse, N.Y.; and
the Cortana Mall in Baton Rouge, La. In addition to nine malls, the company
also owns 14 strip centers throughout the nation, including the Shops at
Pennsville Center in Pennsville, Salem County.
"He's got a different vision for these malls,"
Swain said of Maksin. "They can't continue to be what they are now."
Maksin cited Spectrum Plaza in Houston and Greeley Mall in
Greeley, Colo., as two of his big successes. Maksin bought Spectrum Plaza in
August 2011 when it was about 30 percent occupied. By February 2012, occupancy
shot to more than 80 percent. That same year, in April, Maksin acquired Greeley
Mall when it was less than 60 percent occupied. He said he is negotiating deals
from national tenants to boost occupancy to more than 90 percent. Sales per
square foot at the mall went from $300 to $400 within two years.
Maksin said the Burlington mall project stood out and
represented a reawakening of the commercial retail industry.
"I call it a recession and depression that started in
2008, and by 2010, the industry totally went to sleep," he said.
"This is the first year in the revival - not just locally but nationally
as well."
The mall at 2501 Mount Holly Road was also a retail riddle:
perfectly situated, yet a drastic failure.
"In the last few years, we went after malls,"
Maksin said. "But Burlington Mall is a star in our portfolio. It's so bad
and so great at the same time. . . . That's what attracted us - and the price
was right."
The low purchase price was largely due to the mall's fallen
value. The mall, which opened on Aug. 5, 1982, had an assessed value of $29.3
million in 1991. By 2006, it was $20.5 million. It is currently assessed at
$13.5 million.
Kristi Howell, president and CEO of the Burlington County
Regional Chamber of Commerce, listened as Maksin and his partners - developer
Patrick G. Heller of Diamond Real Estate Investments L.L.C., of Limerick,
Montgomery County, and Peter Hovnanian of J.S. Hovnanian & Sons - gave a
presentation on March 13 outside the mall's JC Penney.
Heller had worked on redeveloping land adjacent to the mall
with the Hovnanian family for years. Maksin said Heller and Peter Hovnanian
approached him in 2012 as he was securing financing to buy the mall to form a
partnership to resurrect it.
"He's a visionary," Howell said of Maksin.
"He's done his homework. He knows what the numbers are."
Here are a few: The Burlington mall has a 55 percent vacancy
rate. The average vacancy rate at malls in the top 80 U.S. markets is between
10.3 percent and 14.6 percent.
On the upside, last year 75,000 cars traveled I-295 per day,
81,000 traveled the New Jersey Turnpike, and 33,000 cars traveled Route 541.
The average household income in 2013 was $82,833 within a three-mile radius of
the mall.
"This game is all about numbers," said Maksin, who
is also a CPA and tax lawyer and splits his time between Las Vegas and New
York, where his law firm is based. "All the ingredients are there."
Resuscitating dying malls is a risky venture. There were
1,100 malls prior to the recession. The number has gone down as some have
closed.
"But most of them are sitting on great land with
already existing development rights," saving time and money on approvals,
Maksin said. "I can just put Tenant A, B, and C into the mall right
now."
Maksin said Moonbeam had another "ace in the hole"
- built-in relationships with national retailers at its other properties.
Several are being courted to open a shop in the revamped Burlington mall. The
company will also give its best sales pitch of the project in Las Vegas next
month at the International Council of Shopping Centers, the largest retail
convention in the country.
Meanwhile, the ailing mall continues to make room for them.
Claire's Boutique closes Thursday, and JC Penney next Saturday.
"It's a shame this mall really never did business,
considering all the [residential] developments around it," said Ilene
Simonini, as she grabbed a marked-down sweatshirt in the JC Penney last week.
"Everyone goes to [the] Moorestown or Cherry Hill [malls]."
Still, 14 national retailers, including Kay's Jewelers and
T-Mobile, are staying to be part of the revitalization, as well as local
retailers, such as Benny and Rita Liu.
The Burlington Township couple own Famous Japan and Flaming
Wok in the food court. They rely on those who come only to eat. But there's no
dinner crowd.
The mall, because of the lack of foot traffic, began closing
at 8 p.m. Monday through Thursday last year, while all other malls in the
region close at 9 p.m. those days.
After Maksin bought the struggling mall in 2012, he held a
staff meeting there and fed the group with a catered lunch from Flaming Wok.
"I said to him, 'What's going on with the mall?' "
Rita Liu recalled.
"And he said, 'Oh, you'll see a big difference.' "
BY THE NUMBERS
55% The Marketplace at Burlington vacancy rate.
10.3-14.6% The average mall vacancy rate in the top 80 U.S.
markets.
189,000 Cars traveling each day on I-295, the New Jersey
Turnpike, and Route 541, all with access to the mall.
$82,833 Average income of households within a three-mile
radius of the mall.
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