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For sale after foreclosure, Fashion Square Mall’s future is up in the air. Developers see upside.

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For sale after foreclosure, Fashion Square Mall’s future is up in the air. Developers see upside.

SAGINAW TOWNSHIP, MI — Planners say Fashion Square Mall could evolve from its retail roots after a fast-approaching foreclosure auction likely delivers the once-thriving shopping destination to its fourth owner in two decades.

Saginaw Township leaders are working to help the aging facility avoid becoming a retail graveyard that will lead to more abandoned American malls.

“This is not a sky-is-falling scenario,” James Wickman is the manager of Saginaw Township.

“It’s maybe no more bad news than what everybody already knows about (online retail’s) impact on mall retail. Fashion Square still has tenants and it still is a place to go; it’s just going to have new ownership.”

Through the Saginaw County Circuit Court, officials say the mall in fall 2020 entered receivership after its owner — Great Neck, New York-based Namdar Realty Group — defaulted on $34.8 million in mortgage debt owed to Wells Fargo.

Under the receivership, Namdar maintains ownership as the mall goes up for auction. The appointed “receiver” in the receivership — Michael Kalil, chief operating officer at the Southfield-based commercial real estate developer, NAI Farbman — oversees the property as it remains open for business in the interim.

The public foreclosure auction takes place Friday, Oct. 8 at 10 a.m. Near the front entrance to the Saginaw County Governmental Center at 111 S. Michigan in Saginaw.

While the auction could land the keys to the mall in new hands, Kalil said it’s more likely Wells Fargo will make the winning bid and task him with launching a search for a long-term owner.

“When we put it on the market — likely in 2022 — that’s when we’ll see the real interest from other developers,” He said.

“And there will be interest.”

Finding firmer footing

The foreclosure auction will arrive one week after the shopping center turns 49.

Despite a years-long downturn in retail sales, officials remain optimistic Fashion Square Mall’s decades-deep roots in township commerce will keep the facility occupied and active entering its second half-century of existence.

In a way, Saginaw Township earlier this week signed off on a community-wide commitment to ensuring the site’s survival.

At its Monday, Sept. 27, meeting, the township Board of Trustees approved its latest master plan document, which in part provides a guidebook for the municipality’s real estate strategy.

The majority of the report’s 107 pages outlines plans in generalities. One exception is Fashion Square Mall and its surrounding businesses, which are dependent on the traffic it attracts. This report does not contain any specific development ideas.

“While the current mall is almost entirely a retail district, future redevelopment of this collective district may include numerous non-retail — or even non-commercial — uses and concepts,” The master plan is on page 30. “The township will continue engaging with stakeholders to consider proposals and investments beneficial to the community at the Fashion Square Mall district.”

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Wickman said the passage was added because of community demand for the mall’s continued economic endurance — even if that endurance means shaping the old shopping center into something new.

In February 2020, a survey of 20 questions was distributed to residents. 642 responses were received, providing guidance on the top priorities for the township. More than half the respondents “envisioned extensive renovations” at Fashion Square Mall, the results revealed.

“We don’t have any great secrets on how to turn around a mall, but we want to be proactive and think outside the box,” Wickman, who communicates regularly with management and other stakeholders at the 786,000-square foot facility, said.

Kalil said “outside-the-box” could mean developing the site with elements other than retail.

“There are investors out there that would continue to operate it as a regional mall,” Kalil said. “There are other investors that might look at some other purpose, like a mixed-use component.”

He said that one model could follow the example of The Shops at Westshore. The Holland outlet features retail stores as well as recreational and entertainment-centric venues. Visitors there shop, eat, enjoy salon visits, and golf — all within walking distance.

Wickman said township planners hope to work with developers to shape the mall into a center that answers community demand.

“We don’t want to be passive and just sit back and watch what happens,” He said.

“We want to be thinking, ‘What does the next version of Fashion Square Mall look like, and are our township policies and ordinances accommodative of new ideas.’ We know that the future of the old Fashion Square Mall is changing, and we want to be at the forefront of that.”

A fashionable history

The future for the Fashion Square Mall began Oct. 4, 1972, when shoppers first stepped through the doors of the facility built on 71 acres of farmland.

JCPenney & Sears were the anchor tenants. Other inaugural tenants included Town & Country Fashions, William C. Wiechmann Co., Bintz Sports, Carter Shop, Seitner’s, Alfano’s Stride Rite, and Tait’s Hobby Shop.

Saginaw Township was experiencing rapid growth at the time. Between 1960 and ‘70, the number of residents surged by 74.4%, to 27,234 people. Within the mall’s first decade, the population grew another 42%.

The new retail attraction attracted people from nearby communities and increased commerce.

Prior to 1972, the region’s can’t-miss shopping destinations included downtown Saginaw, with the now-defunct Jacobson’s as a centerpiece there. The once-bustling Buena Vista Township-based Fort Saginaw Mall — standing then where a grassy field grows now — also began its decline after the new shopping center arrived.

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Fashion Square Mall swelled with customers during the mall boom that colored American culture in the 1970s and ‘80s.

Parents sought clothes at Hudson’s after dropping kids off to play Pac Man at Aladdin’s Castle. Adults leafed through Tom Clancy novels in Waldenbooks and teenagers held headphones to their ears to sample albums at Sam Goody’s. Babies were able to cry while taking photos with Santa Claus, and then smiled beside the Easter Bunny during the holiday shopping seasons.

The shopping center also fed a hungry commercial area, attracting business growth along Tittabawassee and Bay roads in the early decades.

In addition to residential support, visitors also came from other parts of the country via the interstate off-ramp located a mile away.

Fashion Square Mall grew in that time, sometimes to meet the demand, other times to generate it.

In 1993, a new food court opened to provide food for customers who shopped long hours. Eight years later, the facility received a $10 million facelift. This modernized its 1970s-built structure.

But foot traffic thinned in the center’s corridors over the years, both as a result of the region’s shrinking populace and consumer buying habits shifting toward online stores. One of the mall’s original anchors, Sears, exited in August 2019. Well before then, store vacancies lasted for longer and longer periods of time as fewer and fewer tenants expressed interest in the 100-unit mall.

The ownership of the store decreased with time.

Nearly 30 years after the mall opened, Chattanooga-based CBL & Associates Property Inc. in January 2001 purchased the complex along with 20 other regional malls and two shopping centers from the mall’s developer — Cleveland-based Richard E. Jacobs Group Inc. — for $1.2 billion.

Fifteen years later, the mall was sold in July 2016 to Namdar Realty Group — along with The Lakes in Muskegon — for an aggregate price of $66.5 million, including the assumption of a $38.2 million loan secured by Fashion Square Mall.

Five years later, it seems that another owner will soon be in charge.

‘Malls are like sports cars’

Despite changes in ownership, Paul Martin was retained as general manager at the mall, keeping his office on site after 20 years there.

“Status quo,” he said when asked how the mall was operating during the receivership period.

A sign the mall isn’t going away anytime soon: Martin coordinated a job fair earlier this month to beef up employee numbers for the facility’s tenants in preparation for the holiday shopping season.

Despite this, both real estate developers and township officials acknowledge that the viability of in person shopping centers in 2021 is a concern for the general public. But they insist Fashion Square Mall’s importance to Saginaw Township and the surrounding communities means it won’t suffer the fate of so many shuttered big box businesses that left behind oversized, vacated eyesores and empty parking lots.

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Wickman was optimistic about the mall’s future in part because of the continued presence of one of its original anchor stores, JCPenney. Last year, seven Michigan stores were closed by the company as part of its bankruptcy plan.

“But they’ve kept this location open, and there’s a reason for that,” Wickman said. “Fashion Square is still important in this region. It’s at a prominent corner, and in a lot of ways, it’s a gateway to our community.”

Longtime Michigan mall real estate developer Jim Bieri was confident about the Saginaw Township shopping center too.

Stokas Bieri Real Estate in Detroit is Bieri’s principal. He oversees the search to find a new tenant for the unit that was owned by Sears prior to its exit two-years ago. Unlike the part of the mall in receivership, Sears owned its space in the building’s northernmost box, meaning it won’t be sold as part of the October auction. It is likely to be sold. Hoffman Estates, Illinois-based Transformco — which now owns Sears and its former space in the mall — hired Bieri for the task.

“Malls are like sports cars: They need constant attention and investment,” Bieri stated. “For these malls to make it, they need new investment. There’s going to be interest.”

Bieri, a Saginaw resident with relatives that still live in the area said that Fashion Square Mall is something he was familiar with since its inception.

“I don’t know exactly what will happen to this center, but it’s a great piece of real estate,” He said.

Macy’s is the only other commercial occupant that owns its own unit in Fashion Square Mall.

As for the rest of the mall:

“There are a lot of options out there for Fashion Square,” Kalil said on the likely eve of his role as the shopping center’s legal receiver.

“It’s well-located, and we still have two anchors (in JCPenney and Macy’s) and a lot of retailers, so we don’t envision it going dark or being a tear-down property. We view it as a very buyable property.”

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