CHEEKTOWAGA, N.Y. — The Walden Galleria first opened in 1989 and has been serving the shopping, dining and entertainment community for more than 35 years.

It also employees more than a thousand people and generates substantial sales tax revenue. 

"There's a lot of good going for it, despite the debt situation," said Cheektowaga Town Supervisor Brian Nowak.

What You Need To Know

  • Malls across the state and nation are struggling financially

  • The Walden Galleria in Erie County the latest to face foreclosure

  • Big box retailers and online shopping to blame in part for the demise of malls

That situation finds Wells Fargo Bank moving forward with bankruptcy proceedings against Galleria owner Pyramid Management Group, after it defaulted on a $270 million loan.

"I wasn't shocked. But, I'm not going to say it's something I saw coming necessarily, that it was going to be part of the process to work through the debt situation," said Nowak.

"People are still buying clothing. They're still shopping. It just looks different now, how people shop," said Charles Lindsey, associate professor, School of Management, University at Buffalo.

Retail management experts say despite the Galleria's strong foot traffic, many traditional malls across the state and nation have fallen victim to big box stores and online shopping, leading to higher vacancy rates.

"The problem though is the debt, that's the elephant in the room. And now we've got a lot of malls that owe as much as the mall is worth," said Lindsey.

All of this is leaving mall management groups to find more creative and innovative ways to do business like converting the commercial space into mixed use, town centers.

"A lot of these malls are in such poor financial health. Very often a mall is the largest taxpayer in a community. Lots of painful issues for communities in question," said Lindsey.

Like in Erie County, where leaders say they remain hopeful the parties will be able to negotiate a successful solution.

"This is the largest indoor shopping mall left in Western New York. It has to reinvest itself and retool. I think there's an opportunity to be a leader in retail for them in the next five years. Beyond that, it's anybody guess," said Nowak.

There are also a number of other malls across the state that are struggling financially, including Destiny USA in Syracuse and Palisades Mall in Clarkstown also experiencing financial difficulties.