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Real Estate - Commercial

New Owner Plans Mall Changes

By Cece Nunn, posted Jul 14, 2017
Plans to update Independence Mall on Independence Boulevard and Oleander Drive in Wilmington are underway by new owner Rouse Properties. (File photo)
After Rouse Properties bought Bel Air Mall in Mobile, Alabama, for $135 million a few years ago, the company renamed the 1.3 million-square-foot enclosed shopping center, calling it The Shoppes at Bel Air.

Rouse, a New York-based firm that is also the new owner of Independence Mall in Wilmington, invested in renovations and upgrades at the nearly 50-year-old Mobile mall, including replacing a former Sears location with a Belk flagship store.

“They have spent considerable money on the property. They did not just buy it and let it just sit there. They put some good tenants in it,” said Adam Metcalf of Metcalf & Company Inc., a commercial real estate firm in Mobile.

Although Rouse has shared some of its plans on its website regarding Independence Mall, a more than 1 million-square-foot enclosed shopping center at 3500 Oleander Drive, the firm has declined to comment further on those plans.

But some of the same strategies Rouse has used in Mobile sound similar to those described in Rouse’s Independence Mall description online.

The Rouse website says the company plans to update the Wilmington mall and make some even bigger changes than it did in Mobile.

“We are currently conducting a sweeping redevelopment of [Independence Mall], which will transform it from a fully enclosed space into a modern, open-air retail destination,” the Rouse Properties website says. “The redesigned space will feature a grocery-anchored power center, a completely updated enclosed mall corridor, a modern lifestyle streetscape of upscale dining and retail options, and a multi-tenant building complex that houses a wide array of specialty service providers.”

Court documents last year in the mall’s foreclosure proceedings named Fresh Market as a potential tenant at the time. Rouse Properties bought Independence Mall for $45 million after the previous owners defaulted on a $110 million loan on a portion of the mall, and foreclosure proceedings went on for a couple years.

Independence Mall and The Shoppes at Bel Air are two of 37 malls listed on the Rouse Properties website. In North Carolina, Rouse also owns Valley Hills Mall in Hickory and Greenville Mall.

Rouse bought Greenville Mall in 2013 for a little more than $50 million.

“From my perspective the Greenville Mall has continued with good traffic and offerings to the public. I cannot remember any real disruptions and definitely no complaints,” said Leo Corbin, president of the Greenville-Pitt County Chamber of Commerce.

At The Shoppes at Bel Air in 2015, Rouse “embarked on a sweeping renovation to add a streetscape” and bring in new retailers and restaurants, including international clothing retailer H&M; a national upscale Asian restaurant P.F. Chang’s; and Grimaldi’s Pizzeria, according to the firm’s website.

The changes also involved modernizing “virtually every aspect of the center, from the façade to the interior common areas,” a Rouse description said.

Last year, the Mobile City Council approved an incentives package that would give Rouse up to $500,000 a year if the mall generates 10 percent more sales tax than the previous year and 80 percent of its new tenants are either new to Mobile or are existing companies opening more stores, according to a story by Mobile TV news station WPMI.

Efforts to reach Mobile city officials to find out whether The Shoppes at Bel Air reached those goals were not successful as of press time. But the incentives were a necessity, some Mobile officials felt, “because the city does not want there to be a dead mall,” Metcalf said, referencing the bleak examples on Deadmalls.com, a website dedicated to chronicling the demise of malls across the U.S.

Those involved in commercial real estate in Wilmington say Rouse could bring good news here too.

“Rouse Properties (and its corporate predecessors) have a long history of innovative retail development, including planned cities, mixed-use projects and festival marketplaces,” said Hansen Matthews, partner in Wilmington-based commercial real estate firm Maus, Warwick, Matthews & Co. “They will likely tie into some open-air trends in retail development as well as lead with some of their own ideas. The mall as we now know it will become less driven by department stores, and it will likely include shopping/dining variety choices with more local boutiques, chef-driven restaurants, cosmetic stores, service providers and a few high-end retailers.”

Matthews said it would be interesting to see if Rouse transitions the site into a mixed-use project.

Workers broke ground on Independence Mall in July 1977. When a previous mall owner, Westfield, wanted to make some changes, “the city was very cooperative and worked with them,” said Charlie Rivenbark, a Wilmington city councilman and commercial broker with Maus, Warwick, Matthews & Co.

He said the mall in subsequent years has become increasingly institutional, with a church and a cosmetology school leasing some of the spaces vacated by retailers.

While those type of tenants might have helped the mall stay afloat, “the mall is built for retail,” Rivenbark said.

Of Rouse’s plans, Rivenbark said, “I think it’s going to be wonderful to pump some life back into it … I think with the coming of places like Mayfaire and The Pointe at Barclay, it’s given national retailers a second and third option, but the mall is still the mall, and I don’t want to see it dry up and drift away.”

Wilmington-based developer David Swain, founder of Swain & Associates, said Rouse might face some challenges.

“Everybody in our industry right now needs to bring excitement to a property. They’re certainly going to do that by bringing upscale dining. Retail options are more limited than they’ve ever been before due to the online opportunities for people buying through Amazon, and most of the major retailers will sell online. That becomes an issue as to who you can attract and what type of tenant is most appealing to the general public, but they’re saying the things that we are all trying to embrace right now,” Swain said of Rouse’s plans.

Rouse’s experience might help.

“If you have major malls across the country, and they’re successful, you’ll have a reputation,” Swain said. “And some of these retailers will come to them just purely because of the reputation of the developer.”

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