With the future of Macy's Inc. uncertain at Providence Place, all eyes are on the three-floor anchor location at the south end of the troubled mall as some determine if Macy's can be persuaded to stay and others contemplate the shopping center without the crucial department store.
The court-appointed receivers in charge of navigating Providence Place through its financial difficulties aren't giving up on Macy's just yet.
W. Mark Russo, one of two receivers, says he has been in contact with Macy's and was informed that no final decisions have been made on whether the Providence store will close. In fact, Russo said, Macy's is "looking at longer-term plans for Providence Place."
"From our standpoint, we were very encouraged by Macy’s positive reaction," Russo told Providence Business News, referring to communications between the retailer and the receivers. "Macy’s appears to be excited about being part of an effort to bring energy back to Providence Place."
The national department store chain has been rumored to be planning to close the Providence Place store since the summer, when a bond rating agency disclosed that it had been told that the mall was on a list of Macy's locations planned for closure.
Macy's has publicly said it plans to close 150 stores – more than 50 by early 2025 and the rest over the next two years. The company has declined to identify the stores targeted to be closed.
Earlier this month, media outlets reported that the Macy’s Providence location has been listed as available by a commercial real estate agency. Details of the listing of the 206,000-square-foot store were unclear.
When asked about the listing, a spokesperson for Macy’s said a final decision on which locations are closing has not been made. “We look forward to continuing to serve customers in a fresh and exciting retail environment at Macy’s Providence mall,” the spokesperson said.
Macy’s has a long-term lease at the mall, but when that expires was not immediately clear.
Because Macy’s is leasing its space, it’s likely the retailer is listing the space for subleasing or selling all of its rights under the lease, says Roy Chun, Kroll Bond Rating Agency senior managing director for commercial mortgage-backed securities surveillance.
But this means the ground lease needs to be assumable – meaning the terms of the lease would be unchanged if transferred to another entity – and it would likely be subject to the borrower or receiver’s approval, Chun says.
The mall was placed under receivership – a state-level version of bankruptcy – on Nov. 1 after the mall owner, Brookfield Properties, failed to make payments on a $259 million loan. Russo and fellow receiver John Dorsey have since hired Texas-based Centennial Real Estate Management LLC to run the mall.
In the meantime, city officials have reached out to the mall’s new leadership and representatives for Macy's to express support, according to Samara Pinto, a spokesperson for Mayor Brett P. Smiley. She did not respond to follow-up questions on if and how Macy’s responded.
While large retailers such as Macy's have been facing challenges nationwide, "the future of the economy in Providence remains strong,” Pinto said.
What happens to the anchor location occupied by Macy's is crucial to the future of the mall.
If Macy’s leaves without a viable replacement, it would likely lead to a drop in foot traffic, causing other tenants to consider leaving as well, says Timothy Howes, a finance professor at Johnson & Wales University.
“It’s a slippery slope,” Howes said.
Howes says the ideal replacement for Macy’s would be a higher-end store – or even multiple stores that split the space. But for that to happen, there would need to be several high-end retailers interested in locating at Providence Place – a tall order since the mall has lost many of its original luxury tenants over the years.
“There needs to be momentum,” Howes said.
At the moment, some current tenants don’t seem to be bothered by Macy’s potential departure.
"We're confident in the mall's future as we see our business grow and word gets around Rhode Island about Level99's unique brand of interactive entertainment," said Matthew DuPlessie, CEO and founder of Level99, which opened in January on the third floor in a spot once occupied by J.C. Penney.
A survey conducted by Level99 earlier this year across all locations shows that 95% of customers were what’s called “destination customers,” meaning they visited the mall primarily to go to Level99.
“It helps lift all the other tenants when you put in a destination that folks are willing to get off their couch for,” DuPlessie previously told PBN.
As of now, Russo said the receivers are setting schedules to meet with city and state leaders and will seek professional guidance as they look for “an array of creative ideas to bring new energy into the property.” That includes discussing future tax treaties with the city beyond the one that ends in 2028. But the receivers have not gotten to that point yet.
"Both Macy’s and the receivership are also looking at longer-term plans for Providence Place," Russo said. "If ultimately, Macy’s long-term plans do not include Providence Place, we will work together to find an appropriate long-term partner."
