Local Malls Are Sitting Empty, and Becoming a Headache for Small Towns

In its heyday, the Berkshire Mall was the place to go in Lanesborough, Mass., drawing huge crowds of enthusiastic shoppers and producing plenty of tax dollars for the small town.

“There were times you could not find a parking place in this mall — inside, it was packed,” said Timothy Sorrell, a town selectman and former police chief in rural Lanesborough, which has a population of about 3,000. For teenagers in particular, it was the place to hang out.

“It was to the point where if we had to throw a kid out of the mall, it was like we were taking away Christmas,” Mr. Sorrell said. “They would actually cry. It was almost the end of the world for them.”

The 720,000-square-foot mall, which opened in 1988, has long been Lanesborough’s single largest taxpayer. In 2007, when the mall was near its peak, it generated $2.3 million in annual tax revenue. The money has helped subsidize the Police Department, schools and road maintenance. But these days, the mall is a mere remnant of its past glory.

Business had fallen off sharply by the mid-2010s. Big-box stores like JCPenney and Sears closed. And the movie theater went dark in 2019. Since then, the mall has been largely shut down, and what remains is in poor shape — one of the main doors is covered with plywood after someone purportedly tried to drive a car through the entrance, and the roof needs to be replaced, at an estimated cost of $5 million.

Deciding what to do with the mall, however, has been a headache for town officials and the mall’s owners. As the mall sits unused, the town wants its owners, Boston-based JMJ Real Estate Holdings and its partners, to sell the property for redevelopment. But the owners have refused, and the standoff has no end in sight.

What is happening to the Berkshire Mall is happening all across the country. While many cities and towns have successfully converted abandoned malls into sports facilities, health care centers, affordable housing and mixed-use projects, doing so can be a challenge. In small towns like Lanesborough, malls are often the largest tax generator, and local officials can be reluctant to admit the big-revenue days are over, continuing to rely on that money. They can also find themselves butting heads with mall owners, who may have different ideas about what should be done with the site.

Even when both parties agree, the finances needed to repurpose a huge shopping center with unique architectural features can be an obstacle.

“Lanesborough is a perfectly good example of an agricultural community” that had no experience with big real estate companies, said Mark Siegars, a lawyer for the Baker Hill Road District, an independent municipal body that oversees some services for the mall. “Then a developer came along and saw an opportunity for a mall, and the town thought it was a great idea because of the tax revenue. But they never foresaw the endgame.”

Today, 950 large, enclosed malls remain in the United States, down from 1,100 in 2018, and 10 to 20 shut down every year. “Probably more should close,” said Vincent Tibone, head of U.S. mall and industrial research at Green Street Advisors, a firm that rates shopping centers on their sales.

But even when they do, it can take years for redevelopment to begin. In West Mifflin, Pa., near Pittsburgh, a sharp drop in business at the Century III Mall left schools, in particular, short of funds, and the owners refused to make even modest repairs, Mayor Chris Kelly said.

Century III closed in 2019 and is now being demolished. Mr. Kelly said the town was optimistic that it could redevelop the 50-acre site.

In Maine, town officials sued the owner of the Bangor Mall, accusing it of failing to make basic repairs. The roof is leaking, and a storm water pipe has failed, causing large sinkholes in a neighboring property and threatening Bangor’s sewage system, officials said. The mall’s major tenants have fled.

The owner, Namdar Realty Group, said in a statement that it “has made substantial progress in addressing the necessary repairs,” including taking steps to fix the roof and the pipe.

In Massachusetts, the Berkshire Mall’s developer, Pyramid Management Group, first proposed building the mall in a nearby and much larger city, Pittsfield, but when the city objected, Pyramid went to Lanesborough. The developer sold the mall in 2014. Since then, it has passed through a series of owners, each paying less than the last, and its assessed value fell from $60.5 million in 2008 to $7.2 million in 2023. That year, JMJ Real Estate Holdings bought the property for $100 and acquired the mall’s $4 million mortgage.

The one remaining store, Target, owns its building and still draws plenty of customers. But the parking lot is mostly empty and dotted with potholes, and small trees grow through cracks in the asphalt. Inside the mall, the water and electricity have been shut off, and numbers have been painted on the outside walls to guide emergency workers who are called to the site. Break-ins have been frequent, the police said.

JMJ Real Estate Holdings and its partners had planned to convert the property into a manufacturing site for cannabis products. They dropped the project amid a slowing cannabis market and now plan a complex of 400 to 600 apartments for older people. A third of Lanesborough’s population is over age 55.

With affordable housing in short supply in the area, local officials say they are eager to see something built on the site, the biggest piece of potentially developable land in the county, but disputes between the owners and the Baker Hill Road District have halted progress.

The road district was created in 1989 to sell bonds so a mall access road could be built. Although the bonds have been paid off, the district continues to rely on property taxes collected from the mall to fund its annual budget of more than $900,000. Part of the road district’s money is funneled to the town, paying the salaries of two police officers and for a new police cruiser every two years, as well as a fire truck capable of servicing the mall. The town is also paid for maintaining the access road.

But successive owners have bitterly complained that the road district has turned into little more than a cash cow for the town. As the mall’s assessed value has dropped, its tax bill fell to $1.15 million in 2024, from $2.38 million in 2007. But that remains far too high for a property that is little more than an empty shell, said Joseph Jones, a manager at JMJ Real Estate Holdings.

The taxes have scared off potential investors in the housing complex, Mr. Jones said.

Lanesborough officials countered that Mr. Jones should have known what he was getting into when he bought the mall. Cutting the road district budget, they said, would shift much more of the cost burden for police and road services to residents. The road district sued JMJ in December for $524,000, the amount owed from last year’s taxes.

“My budget is bare bones as it is, and if you take away a third of my budget, I can’t provide 24/7 coverage for the town,” Lanesborough’s police chief, Robert J. Derksen, said. Without road district money, “the taxpayers are going to have to make up the difference,” he added.

Mr. Siegars, the lawyer for the road district, said the Berkshire Mall should be a lesson for other smaller towns.

“They just think money’s going to solve the problem,” he said. “All money does is solve the problem of what was there. The past. It doesn’t solve the problem of what’s going to be the future, and I think that’s where small towns are really disadvantaged.”