Could Providence Place survive without Macy’s?

by: Alexandra Leslie

PROVIDENCE, R.I. (WPRI) — Macy’s plans to close toughly 150 of its stores over the next two years, but more insight into the future of company may be coming this week.

ORIGINAL NOTE: https://www.wpri.com/business-news/could-providence-place-survive-without-macys/

The retail giant is planning to report its second quarter 2024 financial results in an earnings call on Wednesday.

As Target 12 reported last month, Macy’s is reportedly planning to close its location at Providence Place, though neither the retailer nor the mall has confirmed that.

However, Target 12 learned the store is expected to remain open for the remainder of 2024, regardless of its eventual fate. The mall’s owner, Brookfield Properties, declined to comment.

Tim Howes, a finance professor at Johnson and Wales University, told Target 12 that while it’s worrisome when an anchor tenant closes, it’s what replaces the tenant that could determine whether the mall can still thrive.

“The thought that Macy’s may be exiting, they obviously have a pretty good amount of square feet in that location, and hence, probably a fair number of customers,” Howes said. “That’s not a good thing.”

Unless, he said, the mall’s owner has a new anchor tenant in mind that “offers more excitement.” But he also noted that retail stores tend to have the highest sales per square foot and pay a premium for that space.

“The big thing is how much store traffic and how much money are people spending per square foot. That drives getting in luxury brands, that sort of thing, so that they’re paying big money,” Howes explained.

A recent report from Kroll Bond Rating Agency, a New York-based financial firm, said Brookfield has indicated that the Providence Place Macy’s “is on the list of locations planned for closure.”

Howes said a big departure could also have ripple effects on smaller stores, especially once their leases are up for renewal.

“They may reevaluate where they want to be,” he added.

Providence Mayor Brett Smiley told Target 12 in a recent interview that the tenancy in the mall is “reasonably strong,” and he doesn’t describe Providence Place as “a failing mall.”

Smiley said he’s unaware of Macy’s plans and wouldn’t speculate, but he suggested that the model of large anchor tenants may need to change.

“I don’t believe that it is a catastrophe right now,” Smiley said. “The owners, which is a very large, global corporation, need to make some of the modernizations to Providence Place-like malls around the country are doing.”

The mall’s current tax treaty with the city ends in 2028.