Natick Mall, a sprawling suburban shopping center larger than any in the region, could be in trouble this fall.
Owner Brookfield Properties has a $505 million commercial mortgage-backed securities loan secured by 1 million square feet of the Natick Mall core. Morningstar Credit has the loan, which matures in November, on its watch list, and Senior Vice President David Putro said there is a “significant risk” it will be placed under special administration.
The risk comes after Wegmans closed its 134,000-square-foot store at the mall a year ago, saying the popular grocery chain “was unable to attract enough customers to make its business model work.”
The 2007 Natick Mall expansion is pictured here a few days after its grand opening.
The grocer is still paying rent and has a lease through 2037, according to servicer comments in the Morningstar database, but Putro said the dark nature of the space is one of the few bad signs for the property.
Another is that 64 of the mall's tenants have leases due to expire within the next 12 months, accounting for about 25% of the floor space involved in the CMBS loans.
The loan was underwritten with $40.9 million in net cash flow, but the property generated $32.6 million in revenue last year despite being 90% leased, Putro said in an email to BizNow. The loan was made by Bank of America in 2019, according to Morningstar.
“They have the cash flow to not default over the life of the loan, but refinancing will be difficult,” Putro said.
Brookfield declined to comment on the mall or the loan.
The mall was built in 1966 and most recently renovated in 2017. The mall was built by businessmen William Lane, Steven Mugar and John Brennan and originally began as a one-story, 600,000-square-foot building linking its anchor tenants at the time, Filene's Basement and Sears.
In 1994, the original building was replaced with a two-story structure to compete with newer, larger malls in the area, according to the MetroWest Daily News. In 2007, the mall was renamed The Natick Collection and added two new anchor tenants (a 100,000-square-foot Neiman Marcus and a 144,000-square-foot Nordstrom) and more than 100 new stores, according to the New England Real Estate Journal.
The 1.7 million-square-foot mall is home to Macy's and more than 200 other stores, making it the largest mall in New England, surpassing the 1.4 million-square-foot South Shore Plaza in Braintree. The Boston Discovery Guide calls Natick Mall a “giant luxury mall,” and YouTuber FleaBitten Adventures calls it “huge!” in a 47-minute walking tour video.
The anchor tenant space is owned separately from the assets Brookfield owns through its CMBS loans. The 1 million-square-foot property tied to the loan is valued at $900 million, according to Morningstar Credit.
Brookfield became the owner of the mall in 2018 after acquiring its previous owner, General Growth Properties.
According to a press release about the closure, Wegmans first recognized the town as an attractive location nine years ago and opened the store in 2018. Wegmans has another store in Chestnut Hill, about 12 miles from Natick Mall, and also has locations in Burlington, Medford and Westwood.
A Wegmans storefront that opened in 2018
Natick Mall is located about 20 miles west of Boston, and the median income for town residents as of July 2023 was $133,000, according to the Census Bureau.
The property may be at risk but there is activity going on from other occupants.
Mini-golf club Putt Shack opened its second Boston-area location at the mall in February, Metro Daily West reported. Escape game operator Level 99 is opening a 48,000-square-foot location in 2021, and Dave & Buster's opened a 40,000-square-foot location in 2019.
Neiman Marcus is set to close its two-story store in the mall in 2022, one year after selling the department store building to The Bulfinch Company for $12.6 million, according to the Boston Business Journal.
“We are constantly evaluating store deployments that best enhance revenue, overall profitability and our integrated retail strategy,” a Neiman Marcus spokesperson said in a statement to Boston.com in 2020.
Originally, the store was slated to be converted into lab space, but Bulfinch nixed those plans in light of the slowdown in life sciences activity.
The owners then inked a deal with a trendy tenant type, pickleball, to fill the space.
In October, The Boston Globe reported that Bulfinch had inked a deal with fitness operator DJ Bosse to open a new 94K SF pickleball venue in the space. The plans were officially announced in April, along with news that four restaurants from Boston celebrity chef Chris Coombs would also be opening at the location.
“Combining Chef Coombs' four-star fine dining experience with Bosse's sports industry expertise, this new venture will bring together the best of each world to deliver an unparalleled experience that reaches far beyond the court,” the operators said in a press release, according to MassLive.
The closed Neiman Marcus store at Natick Mall
According to the Globe, Bulfinch has been redeveloping big-box retail space in malls across the state, including the former Atrium Mall in Chestnut Hill becoming a Life Time Center and the former Dick's Sporting Goods across from Westgate Mall in Brockton, which was leased to Urban Air Adventure Park in July.
Other malls in the state have also struggled in recent years.
Massachusetts has the third-highest percentage of shopping centers, including malls, as a percentage of brick-and-mortar stores among the nation's largest metropolitan areas, according to CoStar data for 2021. This glut has led to worse fate for malls in the region since the start of the pandemic.
In April 2023, Simon Property Group's Solomon Pond Mall in Marlborough was valued down from $200 million to $30.4 million. Simon had listed the mall in the “other real estate” category, a classification it used for properties at risk of being handed over to lenders.
Philadelphia-based Pennsylvania Real Estate Investment Trust's $53 million CMBS loan on the Dartmouth Mall property in Dartmouth went into special administration in July 2023 after maturing on April 1, 2023, according to the Boston Business Journal.
The 470,000-square-foot Hampshire Mall in Hadley is set to go up for auction June 20 as the property's mortgagee begins foreclosure proceedings, the BBJ reported . Owner Pyramid Management Group sold the Plymouth Mall property for $9 million, a reduction from the $15.3 million it paid for it in a 2013 foreclosure sale.