MUNCIE, Ind. — The aging Muncie Mall, which could see new ownership in 2020, can't survive as it is, according to a Ball State University expert who is calling for a mall renewal plan.

"As civic leaders and a community, we must regard the mall as part of our economic development strategy, because the mall is an employer, we have provided infrastructure to sustain the mall, and they pay property taxes," says urban planning professor Michael A. Burayidi. "We can't simply assume that the private sector should take care of it and the public sector has no role in its revitalization."

One of many possibilities is replacing two of the mall's former anchors — Sears and Carson's — with new anchors that aren't places to shop, such as a children's amusement or water park, a fitness center or even a megachurch, Burayidi said in an interview.

The problem is not just that more customers are shopping online via their computers and phones, it's also that "we're over-retailed — we've got too much retail compared to the population, so some of the shops and retail businesses have to close to bring the market to balance," Burayidi said.

The mall's owner, Washington Prime Group (WPG), in recent weeks and months dropped two similarly struggling malls from its portfolio of more than 100 shopping centers for far less than it owed on the properties.

• In July, Towne West Square, Wichita, Kan., was sold to Kohan Retail Investment Group, of Great Neck, N.Y., for only $14 million after WPG defaulted on the mall's $44.8-million mortgage.

New owner Mike Kohan, who sees the future of aging malls as places for more than just shopping, told The Wichita Eagle his first strategy would be to bring events to Towne West. "Events are very important," he was quoted.

• On Dec. 10, primary mortgage holder Wells Fargo Bank purchased West Ridge Mall and West Ridge Plaza, Topeka, Kan., for $27.12 million at a sheriff's sale. That's how much the bank bid to protect its interest in the property, on which WPG had owed about $50 million. The company that is managing the mall for the bank has said entertainment will be a big focus as well as local retailers.

Muncie Mall could be the next WPG property on the auction block. A real estate investment trust headquartered in Columbus, Ohio, WPG has identified Muncie Mall as a non-core, over-leveraged shopping center that it plans to default on as well. The mall was encumbered by $33.9 million in mortgage debt at the end of 2018, according to the company's most recent annual report.

"I suspect the Muncie Mall will be sold to another investor at a steep loss," Ball State economist Michael Hicks told The Star Press. "Such a restructuring might reduce the rents enough to attract or retain some additional tenants. Right now, I don't envision what kind of viable activity could be attracted to the mall without some deep rental discounting."

Burayidi predicts one of three futures for the Muncie Mall.

First is keeping the mall as it is but finding additional uses, like at Southdale Center — "they don't even call want to call it a mall anymore," Burayidi notes — an Edina, Minn., Simon mall anchored by Macy's and Life Time, a health club that includes rooftop swimming, indoor soccer, a spa, cafe, basketball court and fitness center.

Another example is WPG's own Mall at Fairfield Commons, Beavercreek, Ohio, where a former Sears store is being re-used as a RoomPlace furniture store and a Round 1 Entertainment site, a venue centered around bowling, arcade games, karaoke, billiards and parties.

A second option is what Burayidi calls "de-malling the mall," or removing the common corridors/courtyards to create an open-air complex of mixed uses where each tenant has its own entrance from the parking lot.

He cited the CenterPoint open-air strip mall in Grand Rapids, Mich., as an example. Three years older than the Muncie Mall, which was built in 1970, CenterPoint was formerly an enclosed mall that has been renovated into an outdoor mall, or "power center," known as The Shops at CenterPoint. Tenants include a Planet Fitness.

"A third choice is simply getting rid of retail altogether," Burayidi said. "No retail at all."

For instance, Amazon has built fulfillment centers on the sites of three former shopping malls in Ohio. And in Michigan, Mars Hill Bible Church is a megachurch that operates in the former Grand Village Mall near Grand Rapids. Closer to Muncie, the relatively short-lived Indiana Factory Shoppes outlet mall in Daleville is now a business center.

Muncie Mall's fate uncertain after more closings

"There is a need to work with the private sector to ensure that we have a plan, a re-use or revitalization plan for the mall," Burayidi says. "It doesn't bode well for the image of the community if you have a mall that failed. People are not going to look at the technicality of malls are failing everywhere."

We don't know what WPG thinks about the professor's idea. "Washington Prime Group and Muncie Mall decline the opportunity to comment on the story," spokesperson Kimberly Green told The Star Press via email.

"I've not heard anything," Marta Moody, director of the city-county planning commission, said of a mall renewal plan. "Part of what we are able to do is dependent on resolution between the owners, the bank, potential new buyers, things like that, but having some ideas in place about what could be done and supported by the community is a good idea."

Local government officials recently approved a community entertainment district application from WPG for its Southern Park Mall in Youngstown, Ohio, where the company reportedly plans to seek tax abatement for a $30-million project to include community space with green space, bandstand, athletic fields and retail stores.

In October, WPG refinanced four of its open-air shopping centers in Illinois, Texas and Indiana, including Muncie Towne Plaza, home to Kohl’s, T.J. Maxx, AMC Showplace and other businesses across the street from Muncie Mall. WPG says it repaid its existing $47.2-million pool of mortgages that encumbered the four sites while simultaneously closing on a new $117 million pool of mortgages at a lower interest rate.

"There is still a lot of activity around the mall," says Todd Donati, director of the Muncie Redevelopment Commission, while also noting that Macy's and J.C. Penney still anchor the mall.

Jay Julian, president of the city-county chamber of commerce, added, "As far as malls go, Muncie Mall is not in any imminent jeopardy, but they clearly have some space available to lease." He cited examples of empty mall space around the country being used for health care and residential development.

An attempt to use Muncie Mall's former Carson's store for more retail — a boutique for makers and antique dealers — did not last long.

"We've had conversations with the owners about re-purposing Sears and Carson's for indoor sports practice and event facilities, but we couldn't find anybody willing to invest that kind of money," Donati said.

The redevelopment commission has made several attempts to bring new housing to Muncie, which Donati likes as a contingency for the mall, "but we're not getting any support for that from the Ball State economists," Donati went on. "(BSU economist) Mike Hicks seems to disagree with us. As long as he keeps bringing that up, people will think twice about doing new housing in Muncie."

Hicks conducted a study that found that the redevelopment commission paid for a housing study that falsely claimed the Census Bureau was projecting population growth in Muncie. The commission declined to retract its work.

"Then, quite shockingly," Hicks told The Star Press recently, "the same wholly fabricated population projections re-appeared in a study backing the new Riverfront Apartments. The whole of the community backers of the project, including the two most prominent members of the board of Next Muncie, were duped into testifying before the common council to ask for tax incentives to support a project based upon raw lies and fabrication."

Muncie has thousands of vacant homes, Hicks went on: "Half or more would sell for well over $250,000 in the Chicago suburbs. Our problem is an excess supply of housing … It's not that we have too much housing that nobody wants to live in because of its condition. The problem is that we have too many homes in neighborhoods that residents don't want to invest in."

Burayidi points out that in addition to abandoned housing, Muncie is also faced with vacant retail spaces, "and if the mall fails that is going to add to the vacancies we already have. That is a headache."

His cure?

"The mall has become an attractive venue for lunch time and weekend walkers, making it a logical location for a fitness center that will complement users' needs," Burayidi wrote in a guest column for The Star Press. "A yoga studio would also be a useful addition to the health-conscious customers of the mall.

"Once the mall is able to draw a critical mass, then it could support some eateries and restaurants. An off-site location of Ivy Tech's culinary program could provide a kitchen that teaches people how to prepare healthy food at home. Other uses that may be appropriate include a child care center, and addition of civic and cultural uses such as a children's library, and perhaps in the long-term senior housing condominiums or apartments."

Contact Seth Slabaugh at (765) 213-5834 or seths@muncie.gannett.com