Despite popular assumptions that regional shopping malls are going away, managers at the Mall at Wellington Green say key tenants are reinvesting, new ones are arriving and an unconventional redevelopment plan just might rev up its retail mojo for years to come.
Still, the idea to put hotels and residences on former store space might have to overcome a “collective scream,” in the words of Wellington’s mayor at a workshop Thursday, April 18. That would be coming from skeptics wary that the village is going a bit heavy on smaller housing units in recent projects.
Here is the concept pitched at the workshop: Demolish the vacant Nordstrom anchor store. On its lot and vast, mostly empty parking area, build hotel rooms and residences for hundreds of people, maybe 1,000. Also included is creating community green space, with touches like pickleball or holiday tree lighting.
This would produce a group of visitors and residents who don’t have to drive to the mall. They’re already there.
“Malls aren’t going away, but what is going away are bad malls that aren’t evolving,” explained Carmen Spinoso, chair of the Spinoso Real Estate Group, which operates Wellington’s mall and about 50 others around the country.
Similar infusions of new uses, often replacing vacant anchor stores or an oversupply of parking spaces, have recharged retail operations in malls such as Tysons Corner Center in northern Virginia, he said. Sometimes that can mean offices. The concept floated in Wellington is for residences and hotels.
The Wellington Village Council would have to approve master-plan changes to allow hotels, condos or apartments on the central mall property. They were only discussing a concept so far, not voting on a formal application.
One question that came up was whether all of this could evolve into too much multi-family housing, given what else is happening in the village.
Mayor Michael Napoleone said he could envision a “collective scream from some people who are watching this and saying, ‘Oh my gosh, don’t build anything else.’”
After all, there is plenty going on near the mall already, he noted. There is new housing, some of it one-bedroom apartments, coming at the nearby Lotis Wellington development, with more residences under consideration south of the mall at K-Park, or rolling out at the Tuttle Royale development just up State Road 7 in Royal Palm Beach.
The mayor asked if not approving the concept would hurt the mall.
“If it’s just like, ‘Hey, we’re going to do these other projects, and we’re not going to let the mall do anything,’ I think that would be a very negative impact on the mall,” Spinoso said. “It would be looked at as old and outmoded and nothing happening. We have all this attention go somewhere else, and the biggest taxpayer in the market is further impaired.”
Vice Mayor John McGovern inquired, “Your ask is a hotel and 1,000 units?”
Spinoso answered, “The ask is residential and hospitality. Could be two hotels. It could be 600 units. It could be 1,000. You could fit 1,000 there. We don’t have a specific ask yet.”
Spinoso calls itself the largest privately held operator of enclosed shopping malls in the country. Its chairman said it is critical to create a sense that the mall is moving ahead with new ideas and investment.
“It’s not an overnight thing, but I think announcements of big developments here are a big jump start, kind of like putting paddles on, shock it,” he said, gesturing with his hands in a way doctors might apply an electrical charge to restart a patient’s heart.
Councilwoman Amanda Silvestri said she liked the idea of redeveloping space rather than building on green areas, though she expressed worries about school impacts, and multi-family housing in general changing the village’s overall quality of life.
“That’s my biggest concern,” she said.
When it opened in the fall of 2001, the Mall at Wellington Green stood as a symbol of the village’s booming prosperity. When the doors opened, it became Wellington’s largest taxpayer overnight.
But its taxable value, once in the hundreds of millions of dollars, tumbled to less than $100 million during an era when regional malls all over the nation felt an economic squeeze.
Consumers have more choices than ever before, not only among brick-and-mortar stores, but also through online shopping and delivery. The pandemic only intensified the pinch for some retailers.
Large department-store anchors in particular have not always weathered the storms, with Nordstrom leaving the Wellington site in 2019. Well before that, chain closings or mergers removed other names from the mall, such as Lord & Taylor (now the site of City Furniture and a movie theater) and Burdines (which was rebranded as Macy’s).
Starwood Capital Group bought the mall from its original owners, the Taubman Group, for $341 million in 2014, reported at the time as the largest property sale ever in Palm Beach County.
But the high-flying trajectory ran into turbulence. After the owners defaulted on a loan affecting multiple mall properties, Wellington’s mall went into receivership. Spinoso was eventually brought in to manage operations, leasing and promotion.
“The mall itself performs very well, and it operates profitably,” Spinoso said.
McGovern asked, “To us who are trying to plan for the future, what does that mean?”
Spinoso said that Wellington Green is successful in the sense that most of the tenants, meaning the stores and restaurants and others, have strong sales volumes compared to their chain averages, and they are profitable, and the foot traffic remains strong enough to support that.
That does not mean that every store thrives or stays forever, and it is normal to have some turnover, he said.
If assigned letter grades, malls in Aventura and Palm Beach Gardens and Boca Raton are generally regarded as A malls, Spinoso agreed in response to a question from McGovern.
“I would call Wellington B to B-plus,” Spinoso said.
All acknowledged there is no single objective formula to hand out such grades, but perception matters a lot, Napoleone said. Marketing is going to be a big issue, he added.
“I think if you ask anyone, and I know because I talk to people, they don’t view the Wellington mall as just a notch below Gardens and Boca and those other malls,” Napoleone said. “Is it a perception problem or a reality problem?”
The goal is to improve both the perception and the reality, Spinoso said.
Among the first steps, his company has endeavored to keep good tenants, he said. He cited clothing retailer H&M’s decision not only to renew a lease, but renovate its store, a process completed in February.
National chains such as Apple and Victoria’s Secret have extended leases, and Arcade Time, a food and games provider, is investing in formerly vacant space across the walkway from the food court, he said.
McGovern said he hears rumors some prestigious tenants are not paying any rent because their presence is so critical to keep the mall going.
“That’s 100 percent not true,” Spinoso said. “They pay market rent and strong market rent.”
Sometimes lease agreements provide for a base payment, and then a percentage of sales above a certain threshold that means a store is doing particularly well, mall officials explained.
For example, the Bath & Body Works store in the Mall at Wellington Green performs at a level that places it in the chain’s top three stores in South Florida, said Asad Sadiq, the mall’s general manager.
Success at stabilizing good tenants sets the stage for attracting new ventures, Spinoso said.
Among the new arrivals is Canadian apparel retailer Boathouse. Kid’s Empire, a playground and entertainment venue, is building in space that raises the normal ceiling heights.
“We’re confident that with the right catalyst, that can convince people that this mall is truly evolving, that we’ll be very successful in bringing a long list of top-quality tenants,” Spinoso said.
The mission is to “get this to an A mall,” he said.
Any projects like hotels or condos will need not only village approval but also consensus among the trust that controls much of the mall property and department stores, such as Macy’s, Dillard’s and JCPenney, which own their store space and parking areas.
Council members asked whether they should make a deal with Spinoso’s firm when it is not the mall owner, and it could be let go or a new owner could emerge at some point. Spinoso acknowledged those possibilities, but said he anticipated that his firm would be around to execute any approved plans.
The future of the mall won’t be entirely about big national chains, Spinoso noted. He said a ribbon-cutting event is coming soon for Lifetime Kitchen, a husband-and-wife team that offers gourmet cooking supplies. The store is already open but some sort of champagne ceremony is the kind of event that helps signal good momentum at the mall.
The death of malls has been predicted for decades, supposedly done in by culprits from big-box retailers to the internet to pandemics, Spinoso said. But good ones manage to adapt and succeed.
“The headline news has been for a long time that malls are going out of business, but you know what, people are starting to realize no, that’s not the case at all,” he said.
