Group looking for buyers for Sault mall ‘excited’ about the opportunity

Commercial Real Estate Services touts Sault Ste. Marie’s struggling Station Mall as a prime downtown investment oppurtunity.

While it’s been a tough few years for the Station Mall in Sault Ste. Marie, the real estate group seeking buyers says it’s an attractive property for many prospective owners.

Since 2017, the mall lost two of its anchor tenants – Walmart and Sears – and struggled with many other malls as shoppers worldwide increasingly went online, particularly during the COVID-19 pandemic.

A sale to SM Holdings in June 2022 for $30 million floundered when the group failed to pay $18 million of a take-back mortgage due in June 2024 to Algoma Central Corp., the original mall owners dating back to the 1970s.

“A court order imposed a deadline of Jan. 16, 2025, for the full mortgage amount, including accrued interest, to be paid,” Algoma Central said in an update to shareholders.

“The repayment deadline was not met and the court has ordered commencement of receivership proceedings to recoup the mortgage.”

B. Reilly Farber was appointed receiver. In turn, it selected CBRE, a commercial real estate firm, to take the lead in lining up potential buyers for the mall.

Station Mall has around 475,000 square feet of space that can be leased on 35 acres of downtown property on the waterfront along the St. Marys River.

In an interview with CTV News, CBRE vice-chairman Mike Czestochowski said while building new commercial properties right now is a major challenge because of costs, finding buyers for older retail is a much easier sell.

Properties such as the Station Mall are more attractive because the infrastructure is in good condition.

“All that’s happened has strengthened older retail,” Czestochowski said.

“The mall itself is in really good shape. It’s being managed by CBRE and when we walked through it, I was pleasantly surprised at how good everything looked -- it’s in really good shape.”

The mall also has zoning in place to allow for redevelopment opportunities, including residential and commercial uses.

Lauren White, an executive vice-president with CBRE, said the property has been on the market for a couple of weeks.

“We haven’t set an offer date yet – we’ll probably do that in the coming weeks,” White said.

“It’s early in the process, but we are happy with the level of activity so far.”

Once an agreement is in place, she said the sale would have to receive court approval.

Czestochowski said that usually the likely buyer emerges as the process unfolds.

“In most cases, it’s pretty clear,” he said.

“By the time you go through the process, multiple rounds of offers, generally, someone stands out. By the end of it, we know who is best suited and is one to pay the best price for the mall.”

Currently, almost 54 per cent of the mall is vacant, but that figure is largely driven by the absence of the two anchor tenants, Sears and Walmart.

Czestochowski said when dealing with potential tenants, it’s often easier to rent large spaces than smaller ones.

“When I see big chunks of empty space, I’m not as worried – I’m more worried about 1,000 square feet than I am about 50,000 square feet,” he said.

“Fifty thousand doesn’t come along very often. So the tenants that would fill that space … really take note when space like this comes up in a mall that’s so well located.”

While CBRE wouldn’t sign leases on behalf of the mall, they are speaking with potential tenants about the opportunity to lease.

“We’re not as concerned about that vacant space,” Czestochowski said.

“We feel that with proper marketing and discussions, we can fill it.”

White added that they’re having ongoing discussions with potential tenants interested in the Station Mall. And Sean Comiskey, a senior vice-president with CBRE, said with strong ownership in place, he’s confident in the mall’s prospects.

“Tenants, you know, in the past may not have liked the partnership and therefore may have bypassed the space for another piece of space in the market,” Comiskey said.

“With a good operator in place. We don’t see this vacancy lasting too long.”

For his part, Czestochowski said they are happy to have the opportunity to help revive the mall. The company has a history in the Sault, and on a personal level, he has family who live in the city.

“I can tell you, when I got the call from the receiver to put forth a proposal, I was excited,” he said.

“I knew that it would generate a lot of interest … So at this point, we’re very happy with the activity level and we’re happy to have the listing.”