About the biggest news event I remember while coming of age in Upstate New York’s so-called Triple Cities (Binghamton, Johnson City and Endicott) was the Oct. 1, 1972, opening of the Oakdale Mall. I was just a high school student at the time and, as you can imagine, shopping was about the farthest thing from my mind. Still, that grand opening 40-plus years ago was an earthquake. It was on TV, in the newspapers and the topic of excited family conversation — especially between my mother and three older sisters. It was the heyday of the shopping mall, and people living in the relatively small Triple Cities region felt lucky to have attracted such a retail behemoth.
It was huge! I mean physically huge, with nearly 1 million square feet of leasable retail space, not counting the vast common areas, or the surrounding parking lot that spread for acres. The structure itself was the biggest retail construct the area had probably ever seen. There were hulking department stores, delicate boutiques, a multiplex cinema and a bevy of restaurants, including a tony one named Copperfield’s that most diners reserved for more eventful occasions.
It was a shoppers’ Shangri-La. Malls made so much sense at that time. Park your car once and have access to dozens of retailers of every conceivable stripe, and it was especially practical during those frigid Upstate New York winters. One of my sisters worked at the mall and was excited to be employed there — doing stints at both Montgomery Ward (called Monkey Ward for short) and Ormond, a women’s clothing store.
The new mall was so successful at attracting shoppers that it plundered business from Washington Avenue in neighboring Endicott (my hometown), and that thoroughfare has not recovered to this day. Once it was home to a popular bakery, a department store, a couple of bank branches and several clothiers, as well as drug, furniture, jewelry and shoe stores. A favorite of mine was Woody’s Records, which thrived until the big-box record stores came along. During the Christmas season Washington Avenue sidewalks were packed with shoppers and usually dusted with a fresh coat of snow. Today, many of Washington Avenue’s storefronts are empty and dilapidated, and retailers that do operate there are mostly of the low-end variety. Endicott denizens warn that Washington Avenue is no longer a safe place to walk after dark.
The Oakdale Mall had a good run but — like so many traditional malls of its kind — the tide has turned. My sister’s former employers, Montgomery Ward and Ormond, left the mall long ago and are now entirely defunct. That might have been some early handwriting on the wall for the Oakdale Mall’s management. Today, the mall is a retail dystopia, deep into the dying process. The latest daggers landed earlier this year with the shuttering of Sears and Macy’s outlets. Those defections prompted Morningstar, the investment research company, to label the Oakdale Mall at imminent risk of closure.
The mall’s owner, New York City–based Vornado Realty Trust, one of the nation’s major real estate investment trusts, did not return phone calls for comment. The company has a market capitalization of about $15.4 billion and its stock is trading at around $76 per share. It raked in profits of almost $1.5 billion during 2016. Clearly, Vornado knows its business, yet even professionally managed real estate companies traded on the New York Stock Exchange are often flummoxed by the situation facing shopping malls. Consider that there are roughly 1,200 enclosed malls in the United States and about one-third of them are dead or dying because there are not enough retailers to fill them.
The questions for Vornado are obvious: To what do they attribute the decline of Oakdale Mall? Does the company have plans to convert the property to a “lifestyle center,” a model which has been very successful in many regions? (A lifestyle center is a shopping or mixed-used development that combines traditional retail with leisure amenities oriented toward upscale consumers.) Short of making that huge financial investment in an area with a paucity of upscale shoppers, is Vornado considering repurposing the property for a different use, such as a satellite college campus, an apartment complex, or a senior housing center? Or, is Vornado considering simply selling the property and using the diminished proceeds to invest in a more productive real estate asset?
The answer to the first question is fairly obvious. Brick and mortar retailers are gravitating toward outdoor, walkable shopping centers. In the case of the Oakdale Mall, its clientele has largely taken its shopping dollars to the Vestal Parkway in the neighboring city of Vestal. Yes, ironically, just as the Oakdale Mall plundered Washington Avenue more than 40 years ago, the Vestal Parkway — another, much larger retail thoroughfare — has, in turn, plundered Oakdale Mall.
Retail experts insist there is still plenty of money to be made investing in retail real estate, though that spending must be done with finesse and agility if retail managers are to keep abreast of new shopping formats and fast-changing consumer tastes.
The Oakdale Mall serves as a poignant case study of the financial devastation being experienced by traditional shopping malls across the Unites States.
Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.