Turnaround case study: Macomb Mall

Developed by Detroit-based Schostak Bros. & Co., the mall underwent numerous improvements before falling on hard times early this decade. First one owner and then another bought the property, but neither could restore the center’s once-vibrant tenancy.

Enter Bloomfield Hills, Mich.–based Lormax Stern, which bought Macomb Mall in 2013 as an REO (real estate owned) property. Lormax Stern saw hidden value in the complex, which, though only two-thirds-occupied, was then home to a lottery store, a “burner phone” shop, an aging dollar cinema and some other somewhat dodgy tenants. “When we bought it, there were retailers doing really well and those doing horribly, so we slowly weeded out the poor performers,” said Lormax Stern co-founder Christopher Brochert.

Despite Detroit’s overall population loss, the mall’s immediate market has held up: 270,000 residents live within a five-mile radius, where household incomes are upwards of $65,000 yearly. There are barriers to entry for other developers, especially on the mall’s built-out home street, Gratiot Avenue. “No one is building anything [major] right now,” Brochert said. Lormax Stern infused some $8 million to redo the floors and ceilings, create new entries and realign store entrances. “One of the keys to success was creating consistency,” said Brochert.

Value City, which had been occupying the former Crowley’s anchor space, was later demolished, and Dick’s Sporting Goods took the site. H&M, Shoe Carnival and Ulta Beauty also joined the mix. The Sears closed down two years ago, with half that vacated space going to At Home and the other half to Hobby Lobby. Michaels and Forever 21 came on board too.

The result of all this is that the vacancy rate has eased dramatically, from roughly 30 percent to only 5 percent, with Bath & Body Works, Champ Sports and others expanding, and upscale restaurants coming in fresh. Kohl’s and Old Navy are among the nationals.

Though Lormax Stern, a developer of power centers, has redone mall properties in the past, “Macomb Mall was already more of an inside-out power center,” observed Brochert. The reinvention created a “hybrid traditional indoor mall [and] modern open-air center.”

Some may be inclined to believe that older retail concepts cannot thrive, but Macomb Mall is proof that “there’s money to be made and lots of closets to fill in these areas,” Ed Nakfoor, a Detroit-area branding expert, told the local press.

Indeed, said Brochert, “we’ve worked diligently to turn this around.”