With 'de-malling,' a new look for Granite Run

The escalators still buzz up and down in the Granite Run Mall, but passengers are rare. The water trickling out of a fountain is the loudest noise in its center lobby, echoing off the glass of empty storefronts.

Just 30 of 125 stores are occupied in the once-bustling Delaware County mall.

Although its business has dropped in recent years, that's not the only explanation for the vacancies: The property is headed for major change.

The best way to turn around the struggling mall, according to its owners, is to demolish it.

What was once a classic suburban mall will be reborn as something more classically urban.

Outdoor courtyards will replace the traditional mall structure as it becomes a town center with retail stores, restaurants, and luxury apartments.

Michael Markman, president of BET Investments, said work could begin as early as August to deconstruct the 40-year-old mall while leaving its large anchor stores intact.

The $100 million project could become the largest new development in Middletown Township in years, bringing a new look to the 59-acre property along Baltimore Pike. It will also become the latest example of "de-malling," or repurposing a failing shopping mall.

"It's a well-located, underutilized piece of property that's fallen on hard times," Markman said. "And it's pretty much the center focal point of the township."

There are 1,110 malls in the United States, and that number is decreasing, according to a report released last month by Green Street Advisors, a real estate research and advisory firm. But the declining number of malls is a good thing, the report stated, for an "undoubtedly over-malled" country.

BET Investments, a commercial real estate firm owned by Bruce E. Toll, purchased the property in 2013 for $24 million with no intention to maintain it as a traditional shopping mall.

The project will be BET Investment's first "de-malling" - a process that Markman said was more difficult than starting from scratch.

Sears and Boscov's, the mall's anchor tenants, will remain open during construction, as structures are demolished around them. Acme and Kohl's also will keep their free-standing stores already on the property.

When it is complete, "it's going to be vibrant," Markman said. "People are going to be walking around and shopping."

Once one of the largest taxpayers in the county, Granite Run Mall's property assessment has dropped in recent years.

"Its revitalization, frankly, is critical to Middletown," said Mark Kirchgasser, chairman of the township council.

The mall was assessed at $61 million in 2011, and is now at just $21 million, which translates to an estimated market value of about $30 million. By contrast, the nearby Springfield Mall has a market value of about $70 million and King of Prussia Mall, in Upper Merion Township, has been valued at more than $1 billion.

Granite Run's loss of value has cost more than $1 million in taxes to the school district, county, and township.

The declining tax revenue from the property is "certainly not a positive thing," said Township Manager Bruce Clark, and its redevelopment will bring in additional tax revenue.

Markman appeared before the Middletown Township council last week to request a change to the zoning ordinance. His proposals have been met with support from township council members and little criticism from residents.

The town center will make the site appear more attractive than a traditional mall, Markman said. He will market the luxury apartments to young professionals and empty-nesters, who may be drawn to urban feel and the chance to walk to shopping, entertainment, and restaurants on the property.

The concept of a town center is not new to Middletown; proposals for the long-delayed redevelopment of the former Franklin Mint site just a few miles down Baltimore Pike once included a town center. That project, on more than 170 acres, now is expected to include townhouses, a hotel, a grocery store, and offices.

Once completed, the two projects together could transform the appearance of the heavily traveled Route 1 corridor through Middletown.

But for some, the end of the mall is bad news. Rose Maleene opened Spoil Me, an accessory shop at Granite Run Mall, 14 years ago and said business has been slow as the mall prepares to close.

"The Internet has taken over, and malls are not the thing anymore," she said.

Maleene's store remained full of purses and jewelry last week, as she sat behind the counter and used her iPhone for day trading.

"It's the only thing I can do right now to make money," she said.

The concept of the traditional mall, however, is not headed toward extinction, according to the report from Green Street Advisors. Even as Markman prepares to transform the Granite Run Mall, nearby malls such as Springfield Mall are performing well.

That gives little hope to some independent retailers in Middletown. Cheryl Alston and her husband opened Sergeant Ben Army Navy Store at Granite Run Mall in 2012, and are now searching for a new location. Alston said she would love to move into a mall with more customers, such as King of Prussia, but "things are so expensive."

Jerry Christie of Broomall remembers frequenting the mall when his four children were young.

He had not returned for many months, but decided to stop inside to take a walk and enjoy an ice cream cone last week. Christie, 67, and a retired police officer, was surprised at what he saw; "there's nothing here," he said.

No other shoppers were in sight as Christie looked around at the vacant storefronts and said he was looking forward to the site's redevelopment. "How could it not be a positive change?"

610-313-8116 @Lmccrystal