Poughkeepsie Galleria Loan in Trouble After Value Plummets 71%
The future of the Poughkeepsie Galleria is being questioned after losing $169 million in value in just 12 years.
While homes are climbing in value across the Hudson Valley, one of the area's largest shopping malls is worth only a fraction of what it was a decade ago. According to updated appraisal information, The Poughkeepsie Galleria's value has dropped a whopping 71 percent since 2011.
Many residents have complained that their homes have jumped in value over the past few years, causing their taxes to climb out of control. While a lower appraisal would be welcome in cases like this, the extremely low value of the Poughkeepsie Galleria is concerning because it's being leveraged for two commercial mortgage-backed loans totaling over $130 million.
According to commercialobserver.com, In 2011 the Poughkeepsie Galleria was appraised at $237 million but its newest valuation now shows that its worth has fallen to only $68 million. Over the past decade, the mall has been faced with several challenges including the rise of online shopping, COVID-19 and the closure of several major retailers including anchor stores occupied by Sears and J.C. Penney.
The Poughkeepsie Galleria is certainly not the only shopping mall facing a crisis like this. In February it was announced that the Palisades Mall was facing foreclosure after defaulting on a $418 million loan and in 2020 the Galleria at Crystal Run in Orange County settled with its lender after defaulting on a $20.5 million loan.
Commercial Observer spoke with Marc McDevitt, the senior managing director at CRED iQ which released the Poughkeepsie Galleria's latest appraisal information. McDevitt says that the Dutchess County shopping center's problem is one that many malls are facing.
The concept of a traditional regional mall with traditional department store anchors without any evolution of mixed-use utility has fallen out of favor with consumers and CRE investors, which is evidenced by [net operating income] declines and subsequent depreciated valuations exhibited in scenarios such as Poughkeepsie Galleria.
We reached out to the Poughkeepsie Galleria for comment earlier this week but have not received a response. Pyramid Management Group, which owns the Poughkeepsie Galleria, has also declined to make any public statements about the status of the distressed mortgage loan.