Valley West Mall, a nearly 50-year anchor of West Des Moines' University Avenue shopping corridor, is set to be auctioned off.
U.S. Bank sued the mall's owner, Watson Centers of Minneapolis, in May, saying the company had failed to make $3.5 million in payments on a $50 million loan on the property. A Polk County judge now has approved foreclosure of the mall and ordered the county sheriff's office to auction it at an unspecified date to help recoup the $42.2 million Watson still owes on the loan, as well as costs.
Valley West Mall's fate isn't unique
Faced with nearby competition since Jordan Creek Town Center opened five miles away in 2004, Valley West has long struggled with a growing vacancy rate. In 2018, it lost one of its anchors as the Younkers department store chain liquidated. In 2020, the COVID-19 pandemic forced the temporary closure of the mall. Then, in August 2021, another anchor, Von Maur, confirmed what had long been rumored: It will move to Jordan Creek Town Center by the end of 2022.
With Von Maur's departure, J.C. Penney will be the mall's sole anchor tenant.
Valley West isn't the first mall to face foreclosure and likely won't be the last.
As shopping habits shift, consumers are relying more on e-commerce services versus traditional brick-and-mortar locations. By 2026, retail analysts predict thousands of stores will close across the country, according to reporting from Insider.
Enclosed malls are being hit hard. An estimated one-quarter of American malls will close down in the next three to five years, according to a 2020 report by Coresight Research. Some mall management groups are focused on trying to attract shoppers with nontraditional tenants like movie theaters, bowling alleys, bars and restaurants ― most notably in Des Moines, Merle Hay Mall.
What Valley West's closure could mean for the City of West Des Moines
A receiver has been operating Valley West since June. After the mall is sold, it's unclear what will happen, buyt the city anticipates the new owner will be unlikely to want to continue using the property for a traditional, enclosed shopping center.
Despite its troubles, Valley West occupies a valuable site between Interstate 235 and the still largely healthy University Avenue shopping corridor, with stores including Target, Home Depot, Kohl's, Best Buy, at Home and the metro's only Whole Foods and Fresh Thyme markets. West Bank is building a new corporate headquarters just south of the mall, and the owners of Westowne Center, one exit east on I-235, have renovated the shopping plaza and brought in new tenants, including the mall's former Boot Barn.
Even if the mall closes, it wouldn't be too much of a hit to West Des Moines' budget, Community and Economic Development Director Clyde Evans said in May. City officials see properties sold or assessed at different values all the time, he said.
And the new owners could change the property into something new.
"If it does change hands, we'll work with whomever has the property," Evans said.
What is Valley West worth?
It's unlikely that the mall would be sold for its current assessed value of $32.9 million. Since 2017, the property value has decreased by nearly $10 million each year.
The same year Jordan Creek Town Center opened in 2004, the first year for which valuations are available on the Polk County Assessor's website, Valley West Mall was valued at the equivalent of about $156.5 million in today's dollars.
Polk County Chief Deputy Assessor Bryon Tack said it's unusual for a property to lose so much value. Most properties in Polk County, would have increased significantly in value over 18 years, he said.
Malls, however, have been struggling around the country. "With these types of retail properties the value is driven by the leases and the income that the property can produce," Tack said. "As their vacancy continued to grow and their income decreased, that's what we we're reacting to."
This article originally appeared on Des Moines Register: What Valley West Mall auction could mean to West Des Moines