Uncertain ownership is the latest problem at the Brooklyn Center mall.
Even Santa Claus seems to have given up on Brookdale.
Walk through the Brooklyn Center mall and you won't find any sign of the Big Guy -- or much else that would suggest that the holiday sales season is underway. Traffic may be down at most malls this year, but at Brookdale it's downright sparse. A recent visit found fewer than 70 cars in the Macy's parking lot. Only a handful of customers sat at tables in the food court, where three of the eight storefronts were vacant. Salespeople outnumbered customers in most stores.
Built in the 1960s as one of the four Dales, Brookdale has had a variety of problems in the past several years, including the loss of major tenants and owners that fell behind on property taxes.
But not all the problems have been self-made. Brookdale has faced increased competition from a boom in retail development in nearby Maple Grove. Demographic changes have led to a decline in per capita income in its trade area.
A new set of owners, Brooks Mall Properties, took over about three years ago and settled the tax bill. But the Coral Gables, Fla.-based company stumbled in efforts to redevelop the mall, and recently called off a project that would have filled the former Mervyn's store space with a Wal-Mart Supercenter, according to Gary Eitel, Brooklyn Center community development director.
"Our understanding is that Brooks Mall is no longer the owner of Brookdale," Eitel said. He said city officials have been told that Brooks Mall's lenders have taken over ownership. Tom Kane, a Minneapolis attorney who has represented anchor tenant Sears in a legal challenge to the redevelopment project, said he also has been told that Texas-based lenders have assumed ownership of the mall.
Representatives of the company and Bloomington-based Welsh Companies, the property manager, declined to comment.
The uncertain ownership couldn't come at a worse time, because the weak economy is challenging even strong retail centers this holiday season.
Regional malls have been feeling the impact of a soft retail economy for more than a year, with average rental rates flattening out at $60.37 per square foot, according to NorthMarq Real Estate Services. Brookdale's top rental rate as of midyear was just $24 per square foot -- an indicator of the low demand for space and the dearth of blue-chip tenants that can pay higher rents.
Brookdale's vacancy rate at midyear stood at 20 percent, one of the highest among area regional malls and considerably higher than malls' 6.3 percent average vacancy rate, according to NorthMarq. Brookdale's figures do not account for about 135,000 square feet vacated this fall when Steve & Barry's closed. The store had opened in 2005, filling the space of another departed anchor, J.C. Penney.
"That seems to be the story at Brookdale -- it's one step forward and two steps back," said Richard Grones, founder of Cambridge Commercial Realty, an Edina firm that specializes in the retail market. "Things get done in bits and pieces. It's not enough."
Grones and others say Brookdale is more vulnerable than other malls to store closings when a retail chain cuts back. For example, its Steve & Barry's store closed before the New York-based retailer announced plans to liquidate and shut all its stores, including outlets at Burnsville Center, Northtown Mall in Blaine and Knollwood Mall in St. Louis Park.
Under its previous owners, Talisman Companies, Brookdale underwent a renovation about six years ago that added the food court and a Barnes & Noble store. But other plans such as adding a movie theater weren't completed. That may have hurt the mall's credibility with potential tenants, especially as some Talisman executives were also with Brooks Mall Properties.
Mike Sims, principal at the Minnesota office of Mid-America Real Estate Group, said Brookdale's prime location at Hwy. 100 and Interstate 694 is a plus. "But it shouldn't be looking at typical department stores as major tenants," he said. "It needs to find untraditional tenants -- like a general merchandise store, a fitness center, a home improvement retailer or even a grocery store. Those are the kinds of things that could drive traffic."
Grones' firm previously had an agreement in the works to bring an LA Fitness center to the mall. But Grones said that deal hinged largely on the Wal-Mart project that has been abandoned.
Sims said it's not impossible to revive Brookdale, but that it will take a long time. Northtown took a few years to rebound after losing Montgomery Ward, Kohl's and Homeplace as major tenants. The mall has added Best Buy, Burlington Coat Factory, LA Fitness and a Herberger's department store, and pushed its occupancy rate into the high 90s.
"With patience, it can be done," Sims said.
But unlike Blaine, where per capita incomes are rising, Brooklyn Center is challenged by an ongoing decline in incomes. In 1990, per capita income in the suburb stood at 87 percent of the average for the metro area, according to the Census Bureau. By 2000 it was down to 75 percent. In the most recent Census Bureau survey, covering the period from 2005 to 2007, it was just 64 percent.
Experts say an important benchmark is 60 percent, because that's roughly where Detroit stands relative to its metro area average -- the worst central-city-to-metro disparity in the country.
Brookdale also has suffered because of a reputation it has gotten over the years as unsafe. Brooklyn Center police statistics for this year through Dec. 8 show an increase in robberies but declines in auto theft, assaults and overall crime at the mall compared with the same periods in 2007 and 2006.
The improvement may be because of the hiring this year of an outside security provider that replaced in-house security personnel.
But Grones said increased security alone isn't enough to change some shoppers' negative perceptions of Brookdale.
"When you walk into a mall and see more security people than customers," he said, "you start thinking you probably shouldn't be there."
Susan Feyder • 612-673-1723