Northland was a mall on the decline for decades. The once-world class mall that sprung up in Southfield in the 1950s, had lost its vibrancy long before it closed earlier this year. Still, earlier this year, in the final weeks, some businesses told Deadline Detroit that business was good and they were disappointed to see the mall closing.
Darrel Hasty, a worker at Hutch's Jewelry, said business was "booming, better than ever." He said it "sucks" that the mall is closing.
Now, we get a peek into what really may have sank the mall, and wounded Eastland.
JC Reindl of the Detroit Free Press reports that fell victim to the same kind of financing that triggered the Great Recession. New York-based real estate firm Ashkenazy Acquisition owns both sites.
The malls had mortgages with easy-money features commonly found on some residential subprime loans of the early 2000s.
There were interest-only payment periods, high appraisals, eager lenders, complex securitization and balloon payments so large that lenders couldn't realistically expect borrowers to actually pay off the loan — everyone assumed a future refinancing.
These types of mortgages underpinned the two ailing suburban malls whose glory days are now well in the past. Today Northland mall is closed and Eastland mall is open but visibly struggling.
"Yes, in 2005 and 2007 there was a lot of easy-flowing money. But this was real estate that should not have been lent on, " said Dennis Bernard, president of the Southfield-based Bernard Financial Group. "And the guys who came in and bought it didn't do a great job."
-- Allan Lengel
