A luxury shopping mall that has given some Madison Avenue-style flair to the Atlantic City Boardwalk will be auctioned off for the second time in two years as it struggles in the fragile economy.
The Pier Shops at Caesars, a four-level retail, entertainment and restaurant complex jutting out over the ocean, was purchased by a group of lenders for $25 million last October during a foreclosure sale.
Lenders, including U.S. Bank National Association, took over after the mall’s former owner, Taubman Centers Inc., defaulted on a $149.7 million mortgage. The lenders brought in new management in hopes of revitalizing the mall, but made it clear that they would look to sell the property.
Now, The Pier is up for sale in an online auction scheduled for Aug. 6-8, according to an ad Wednesday in the Wall Street Journal. Bids will start at $20 million on the website auction.com cq.
Representatives of the lenders and the mall manager Cushman & Wakefield Inc. did not return calls Wednesday seeking comment.
The mall, built on a pier 900 feet over the ocean, is connected to Caesars Atlantic City by an enclosed pedestrian skybridge spanning the Boardwalk. A spokeswoman for Caesars Entertainment Corp., the casino’s parent company, referred questions about the auction to mall representatives.
October’s foreclosure sale brought only a fraction of The Pier’s $200 million development cost. The complex opened in 2006, at the height of the Atlantic City real estate boom. It introduced Manhattan-like retailing — including chic names such as Gucci, Burberry, Louis Vuitton and Tiffany & Co. — to a Boardwalk long dominated by cheap souvenir stands and T-shirt shops.
The Pier’s website says the mall has nearly 65 retail shops and restaurants. Another attraction is an elaborate sound and water show that features fountains shooting high in the air choreographed to different styles of music.
Despite its oceanfront location and glitzy retail stores, the mall has struggled to find business amid tighter consumer spending in the sluggish economy, one Atlantic City real estate agent said.
“Definitely one aspect to it is that it’s too high-end,” said Joshua Levin, owner of Levin Commercial Real Estate.
Levin said The Pier has also been hampered by its lack of parking and some difficulty for customers to access the location. He noted that another drawback for The Pier is competition from a collection of downtown factory outlet stores called The Walk.
“You’re competing with The Walk right down the street,” Levin said. “Some of the things you could buy for full price at The Pier you can buy at The Walk at a discount.”
Levin suggested that The Pier’s owners should conduct a marketplace analysis to determine the demographics of the typical Atlantic City shopper. He believes the mall should reposition itself as a more affordable shopping center combining mid-level stores with the high-end retailers that currently give The Pier its exclusive image.
“The Pier does not serve a demographic that the Boardwalk has at this point,” Levin said. “They should bring it down a notch to be less intimidating and have more user-friendly products. They really built a world-class shopping center without having the right demographics to support it. That pier will do very well if you put the right tenants there.”
Levin also said that longer-range redevelopment plans should be explored, including the possibility of adding casino gambling, hotel rooms and an oceanfront concert venue to the mall.
“I think that doing a mixed use will be more advantageous than putting all of their eggs in one basket,” he said. “That could be a great entertainment venue. The first floor could be for retail, the second floor for a casino and the third floor for hotel rooms.”
The Pier Shops at Caesars
Opening date: June 27, 2006
Development cost: $200 million
Retail, dining lineup: Nearly 65 shops and restaurants
History: The Pier was carved from the remains of The Shops at Ocean One, a mid-level mall that formerly stood at the site