International mall operator Unibail-Rodamco-Westfield (URW) plans to sell most of the malls it owns in the United States in 2022, the company announced last week. The news immediately puts the future of Montgomery Mall and Wheaton Plaza into serious question; URW owns both malls.
The news might have been a complete shock had it come prior to Westfield's acquisition by Unibail-Rodamco in 2018. After all, Westfield sunk well over $90 million into additions and renovations of Montgomery Mall alone this past decade. If Westfield was still the sole principal owner, this would not be happening.
Clearly, URW is not committed to bricks-and-mortar and indoor malls, and is seeking a Sears-Kmart-style payday via selling off the real estate. Here in Montgomery County, that real estate is worth a fortune.
However, despite a Wheaton sector plan filled with developer giveaways, there has been little to no demand in the private sector for mixed-use development in the same area of Wheaton where Wheaton Plaza is located. Since the new plan was passed by the Montgomery County Council roughly a decade ago, only two smaller, private sector apartment developments with no retail or dining have been constructed. A Montgomery County government project, a taxpayer-subsidized government office building at the Wheaton Metro station, is the only other significant project to be realized in the last decade.
It will be interesting to see who the potential buyers of Wheaton Plaza will be, and what they plan to do with the property. Montgomery Mall's site has greater demand. But there is serious question as to the quality of the redevelopment of both sites.
Will they become two more cookie-cutter multifamily housing developments like recent housing projects at Rockledge and Tower Oaks, or vibrant communities with high-profile retail and restaurant tenants like Pike & Rose and Virginia's Mosaic District? Will the new owners take the cautious approach Westfield had planned by building on parking lots around the malls first, or a high-risk dice roll like the one that backfired on Lerner, when it pulled the plug on its popular White Flint Mall only to wind up with an empty field and no income?
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