A tough economic environment has led Brookfield Property Partners to cancel plans to redevelop a mall in Burlington, Vermont, and local officials aren’t happy.
Brookfield became involved in the project in 2017, with plans to build apartments and a 10-story office tower on the now-empty site. But last month, it sold its interest in the project to local partner Devonwood Investors.
“We made a lot of progress over the past three years, completing the assembly of the site and progressing approvals,” a Brookfield spokeswoman told the Wall Street Journal, “but the long-term nature of the next phase of this development doesn’t fit with our funds mandate.”
Burlington Mayor Miro Weinberger criticized the investment giant’s decision to pull out without bringing a new partner to replace it, calling it “a breach of faith and a betrayal of trust.” The city issued a letter of default to Brookfield on July 22 and plans to pursue damages.
“They understand that their reputation is at stake here,” Weinberger said. Brookfield says that its development agreement allowed it to sell its interest, but the city disagrees.
In a 2018 investor presentation, Brookfield named the Burlington project as an example of its strategy of transforming struggling malls by shrinking the retail footprint and adding office and residential uses.
But analysts say Brookfield’s redevelopment strategy may not be feasible in the current economic environment.
“Tenants are likely slower to take up space now,” said Alexander Goldfarb, a senior research analyst at Piper Sandler Cos. “There is no rush to complete a new hotel or add new restaurants.”
Brookfield is continuing its mixed-use redevelopment of the Stonestown Galleria in San Francisco, and counts Manhattan’s Brookfield Place among its prior mixed-use successes. [WSJ] — Kevin Sun
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