Dead Malls Being Sold at Ridiculously Low Prices


aiken mallFor some time now the regional mall market has been dividing into two starkly different camps consisting of the “haves” and the “have nots.” Prime assets, such as the 324,000-square-foot Shops at Crystals on the Las Vegas strip, continue to command sale prices of more than $1 billion. However, investor interest in failed malls is meager at best by comparison.

Consider the following string of regional shopping malls that sold in the past few weeks. The three properties – all located in outlying, sparsely populated areas and all hit with major store closures — join the list of 76 other malls of 100,000 square feet or larger that have sold for less than $10/square foot in the last two years:

  • The 503,626-square-foot Gadsden Mall in Gadsden, AL sold for $9.85/square foot ($4.96 million) after trading for $58.8 million in 2005.
  • The 358,057-square-foot Aiken Mall in Aiken, SC sold for $8.45/square foot ($3.03 million). In 2007, the same mall carried an appraised value of $26.3 million.
  • The 746,410-square-foot Fairgrounds Square Mall in Reading, PA sold for a ridiculously low $1.54/square foot ($1.17 million). In 2007, the mall carried an appraised value of $50.7 million.

The buyers of these properties all employ strategies aimed at turning dust into diamonds. Hedge fund investor Farallon Capital Management, which acquired the Gadsden Mall, has acquired a number of failed or under-performing malls after raising $375 million in a real estate investment fund in 2014.


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