What Happened To The Atrium Mall?

BOSTON (CBS) - When the Atrium Mall opened in 1989, a valet parked your car, a doorman greeted customers and a complimentary personal shopper made suggestions on what to buy at the swanky, 66-store shopping center.

But on a recent visit, no one was there to greet the few shoppers, the service desk was empty, and the mall was virtually empty with just a dozen stores and three restaurants that still remain open.

The 364,169-square-foot mall on Route 9 in Newton has been on the decline for years.

Its demise commenced with the opening of the Natick Collection up the road and its situation worsened when Legacy Place's 80 stores in Dedham debuted.

The mall's occupancy rate has fallen to less than 50 percent while the net operating income for its owner, Simon Property Group, the nation's largest real estate investment trust, plummeted by nearly 36 percent to $4.7 million last year, down from $7.3 million in 2009, according to Bloomberg data.

In December 2010, the $41 million commercial mortgage-backed security on the property went to a special servicer, and Simon has been late on three of its $323,000 monthly payments, the Bloomberg data indicate.

Leasing at the troubled mall peaked in 2006 with a 95 percent occupancy rate and average asking rents of $32.64.

But as of last Sept. 30, the most recent data available, the occupancy rate had fallen to 61 percent with an average asking rent of $27.12, the special servicer handling the property wrote in a note including in a filing.

"It's sad, the mall is dying," said Muhammad Irfan, owner of Decor Mantra, a home furnishing store that has leased space for three years.

"Until the mall owners tell us what they're planning to do, we don't know what we'll do. For now, we are hanging on until the end."

So far, the landlord isn't talking.

Les Morris, a spokesman for the Indianapolis-based company that owns or has an interest in 337 retail real estate properties in North America with 14 in Massachusetts, said Simon does not comment on leasing negotiations, or on acquisitions or dispositions of its malls.

"We will share specifics as plans are finalized," he said in an email.

Jennifer Polk, manager of Grettacole, a salon and day spa, said she's heard lots of rumors about the mall's future, including the possibility that a big-box store would take the first two floors, while the upper floors would be converted to medical office space.

Traffic to the salon, she said, stems from being at the location for more than a decade with a stream of loyal clients.

"We are a destination and do a fantastic business because Grettacole has built up clients over the years," she said.

Michael Tesler, a consultant at Retail Concepts in Norwell, said the Atrium has been headed downhill for years.

With the exception of Second Time Around, a used-clothing store and the Cheesecake Factory restaurant, many of the mall's retailers have been hurting.

"That vertical mall format was introduced more than 20 years ago with valet parking, but it doesn't work any more," he said.

"Simon has given up on it as far as retail goes, and ideally, the mall could be reclaimed for some kind of mixed-use use. It appears their goal is to sell it and get out of the retail business and invest in the Chestnut Hill Mall property that they own across Route 9."

James McCaffrey, managing director at Eastdil Secured, a firm that sells retail properties, acknowledged the Boston company was hired several months ago to sell the property, but declined to comment further.

Lisa van der Pool of the Boston Business Journal can be seen weekdays at 6 a.m. on WBZ-TV.

You can follow Lisa on Twitter at @lvanderpool.