NEWS

After foreclosure, what does Montgomery Mall's future look like?

Cameron Morsberger
Bucks County Courier Times

In an era of radical online shopping, small business activism and extensive health precautions, another mall is on the brink. Earlier this month, Montgomery Mall, a Montgomery Township shopping center that encompasses more than 90 stores, was foreclosed upon.

A judge issued a $118.78 million judgment against the mall’s owner, Simon Property Group’s Mall at Montgomery LP, on July 12, according to court documents. Wilmington Trust, a trustee of Wells Fargo Commercial Mortgage, filed the initial complaint for foreclosure June 8.

The Montgomery County court’s final judgment on the case states that the mall owners agreed to the foreclosure and “subsequent foreclosure sale of the subject leasehold estate,” but when that sale may take place is not yet known.

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The foreclosure doesn’t come as a complete shock — last August, a $100 million loan on the Montgomery Mall was at risk of defaulting, which signaled Simon Property Group’s eventual judgment. The company had stated it would not inject any more capital in the mall.

Malls across the country have been reducing their size or outright closing more rapidly in recent years, and one-fourth of America’s malls will likely close by 2025, some retail experts predict. At Montgomery Mall, close to 30 retail spaces remain uninhabited.

Last year, Simon walked away from four malls, totaling $410.9 million in mortgage debt, and saw a net operating loss of almost $1 billion. Nearly 50 retail corporations declared bankruptcy in 2020, which marks the largest number of retail bankruptcies since the financial crisis in 2009.

Simon Property Group did not respond to multiple requests for comment.

Carolyn McCreary, manager of Montgomery Township, said the Montgomery Mall has always had its place in Montgomery County.

“The mall has been an integral part of this community, not just Montgomery Township, but the whole North Penn community, for decades,” McCreary said. “It’s how we identify ourselves. When people say Montgomery Mall, they think of Montgomery Township.”

While a major financial asset and social hub is struggling, McCreary said the area is experiencing a “rebirth,” citing the mall's Wegmans, nearby English Village stores, and surrounding restaurants that offer other “opportunities for commerce.”

While McCreary said she anticipates the township will continue to collect the same amount of property tax on the now foreclosed space, the issue comes as e-commerce dominates the shopping world and communities are forced to adapt.

“We’re seeing another renaissance now with online shopping and people wanting to return to local businesses,” she said. “It obviously is not the mall it was even 10 years ago.”

That digital evolution could soon be taking place within the malls themselves — with many large-scale department stores, including Sears and J.C. Penney, closing retail locations. Simon Property Group reportedly discussed creating warehouse spaces for Amazon last year. Such a business venture has not yet been confirmed.

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Along Bethlehem Pike in Montgomery Township, some department stores have closed, including an A.C. Moore and Thomasville Furniture at the Montgomery Square Shopping Center.

Simon Property Group also owns the Oxford Valley Mall in Middletown, where storefront vacancies also threaten the property’s future. Middletown Township Chairperson Tom Tosti said the news of the Montgomery Mall’s foreclosure was “concerning,” given its connection to Simon and the number of stores Oxford Valley has already lost.

“The stores are dwindling down,” Tosti said. “A lot of it has to do with the pandemic and people not going there, but people just want something different, and I think Simon is starting to see that.”

The Disney Store closed in the Oxford Valley Mall in Langhorne in 2020.

Tosti cited the King of Prussia Mall, another Simon property, as one local example of how investment and revitalization in shopping centers can be successful. He said he hopes Oxford Valley Mall can avoid Montgomery Mall’s fate through renovation efforts that bring people back to the mall.

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Despite plans for more than 600 luxury apartments to be built at Oxford Valley later this year, Tosti said the difficulty of malls and large shopping centers like Montgomery Mall is both a worry and a potentially imminent reality for the rest of Bucks County. For now, his “fingers are crossed.”