- November 20, 2024
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While the conversation about the future of traditional malls often focuses on bringing them back to life with a broader tenant mix or experimenting with anchor space, the reality is that in many cases the best thing to do is turn them into something else.
The reason is malls are built on huge parcels that developers find attractive because the fundamentals and infrastructure are already in place.
There’s a lot of benefit to going vertical from a cost perspective, says Nelson Taylor, vice president of market research for the Fort Myers commercial real estate firm LSI Cos. “Generally, the land is in premier locations with all offsite development done — water management, utilities and what not. Another is impact fees from new development is offset by the previous development.”
Saul Lua, a research analyst for JLL, found that 48% of mall redevelopments since 1991 have seen properties turned into mix-use developments with the majority — 88% — retaining at least some sort of retail component (Lua wrote about mall redevelopment for a JLL market report issued last year. He updated the data and findings in the report for this story.)
“The most popular mall redevelopment uses are residential and office, with roughly 52% of mall redevelopments including residential use and 34% including office use,” Lua writes.
“As mall redevelopers attempt to attract consumers with changing needs by creating live-work-play destinations or lifestyle destinations, uses like hotel, green and open spaces, and health and medical are becoming common additions to redevelopments today.”
Three former mall sites being redeveloped locally are in different phases of being transformed. Progress incudes:
Project: Bringing more residences to the already altered University Mall in Tampa.
Builder/Developer: Core Spaces and Rd Management
Details: An already-growing development near the University of South Florida, on what was once University Square Mall, is going to get bigger in coming years. Developers say the project will include up to 3,000 student housing beds, several hundred traditional units and 10,000 square feet of retail.
These new units are the latest steps to completely remake the former mall into Rithm at Uptown, which combines life sciences and technology research facilities with retail, entertainment, residential and office space.
University Square Mall opened in 1974 with Maas Brothers, Robinson’s, Sears and J.C. Penney as anchors, along with 32 stores and a movie theater. In 1983, a 100,800-square-foot Burdines was added, which brought the mall to more than 1 million square feet and 130 tenants.
By the late 1980s and early 1990s, department store chains were being bought. Familiar names were being replaced.
Heitman Retail Properties out of Chicago bought the property in 1992 and two-years later began a $48 million renovation. Over the next 22 years it changed hands several more times before RD Management bought the property in 2014 for $29.5 million.
From the start, RD has said its plans included transforming the nearly 100-acre property from a traditional mall setting into a destination that includes innovation-focused tenants, mostly in research, technology and medicine but also retail.
And it includes housing. The developers opened Hub Tampa, a 359-unit, 890-bed student housing community on the property.
These latest plans continue that focus.
Hub II, the first phase of the new project, is expected to break ground this fall. It will include more than 400 units, 1,300 student housing beds and an 800-stall parking garage. Work is expected to be done in late 2027.
Hub III and Hub IV will include over 700 beds and 800 beds, respectively.
While no timeline was announced for the phases for Hub III and IV, the developers say the entire development will be delivered by 2030. And when it’s done, Rithm will have 7 million square feet of development with more than 2,000 residential units.
Project: Building an apartment complex on land once part of the former Desoto Square Mall near downtown Bradenton.
Builder/Developer: Madison Capital Group, North Carolina
Details: The developer plans to put up five four-story buildings and two carriage homes on the site — a 7.5-acre parcel — as well as a clubhouse. The complex totals 240 units. The piece of land it is building the apartments on is just southeast of the former Sears building.
Madison is no stranger to the property, having previously developed the former Sears store as a Go Store It self-storage facility.
DeSoto Square, which opened in 1973 and sat on 57.86 acres, closed in 2021 after years of decline and after its previous owner, DeSoto Owners LLC, filed for bankruptcy.
According to court records, the former hotspot for local residents had fallen into disrepair and was about 40% occupied at the time of the filing.
Before bankruptcy though, DeSoto Owners had tried to sell the property — marketing it as a redevelopment site that called for a 128,000-square-foot retail lifestyle center, 30,000-square-foot grocery store and two apartment communities totaling 705 units.
The property, however, was sold in a bankruptcy auction later that year for $20 million to the mall owner’s lender, Romspen US Master Mortgage. Romspen sold it in 2022 to Nashville developer Charles R. Jones for $25.7 million.
Jones’ plans for the remainder of the property are not immediately clear but he has a track record of turning moribund properties around.
According to his website, he converted a 64,000-square-foot former convent and school sitting on 2.55 acres in Nashville into a commercial building with a tenant roster that includes bridal counselors, law offices, a hair salon and a music publishing company. He also redeveloped and preserved a former burlap bag factory built in 1871 in the city into a 218-unit condominium complex.
As for Madison’s 7.5 acres, the company just secured a $47 million construction loan to build its apartment community. Construction has begun, and officials expect to finish it in early 2026.
Project: The transformation of the former Southgate Mall into apartments
Builder/Developer: Benderson Development
Details: East Manatee County based Benderson seeks to build 848 apartments on the site of what once was Southgate Mall and is known today as The Crossings at Siesta Key.
The apartment community, if it wins final approval, will be built on the nearly 34-acre property with 10% of the units set aside for affordable or attainable housing.
Benderson bought the property at 3501 S. Tamiami Trail in 2022 for $25.1 million.
The mall, which first opened in 1956 as one of Sarasota’s first grocery-anchored shopping centers, had at one time been owned by the French company Unibail-Rodamco-Westfield, which operated it as Westfield Southgate Plaza.
Westfield, which paid $62 million for the mall in 2003, spent $8 million to renovate the property over the next decade or so in large part to compete with Benderson’s The Mall at University Town Center, which opened in 2014.
New York private equity firm O’Connor Capital Partners took ownership of The Crossings in 2020 when it bought a 51% equity stake from Westfield. By that point, the French mall owner was referring to The Crossings in financial documents as a “non-core” asset.
Benderson’s plans for the Crossings property are a long way from fruition. Multiple legal and logistical hurdles remain.
The developer has asked the Sarasota City Commission to amend the Comprehensive Plan to allow for the apartments to be built — which requires a supermajority 4-1 vote. Earlier this month, commissioners unanimously approved the transmittal of a proposed amendment to state review agencies for comments prior to holding a public hearing on adopting the changes later this year.
Todd Mathes, Benderson’s director of development, said at that commission meeting that even when the approvals are granted, it’s going to take 10 to 15 years to build the community. A big part of that, he says, is that “there's a lot going on on the property. There are still leases. There is still retail tenancy.”
Among the current tenants are CinéBistro Siesta Key and Connors Steak & Seafood.
Previous reporting from Elizabeth King, Andrew Warfield and the Sarasota Observer, sister paper of the Business Observer, contributed to this story.
