What does it take to revive a dead mall?

stonebridge_deadmall

Randy Hallman Richmond Times-Dispatch

 

Richmond, V.A., MARCH 29, 2015

Azalea Mall, Eastgate Mall, Cloverleaf Mall. 

All had their optimistic beginnings. All had their thriving years. All had their declines into ineffectiveness as attempts to remain relevant stumbled in a changing retail landscape. 

Can all three come back? One of them offers a model for reviving a mall. 

Stonebridge is the mixed-use development already well underway on the site of the former Cloverleaf Mall. 

Cloverleaf opened in 1972 at Chippenham Parkway and Midlothian Turnpike in Chesterfield County. 

The mall struggled in the 1990s and, in 2000, its J.C. Penney store closed and moved to Chesterfield Towne Center. The following year, the mall’s cinemas closed and, in 2003, the Sears and Hecht’s stores followed suit. 

By the time the mall closed in 2008, only three stores were left. 

The new development, Stonebridge, offers evidence that a failed mall site can be reclaimed for commerce. 

But it was not an easy revival — certainly not a quick one. And every dead mall’s postmortem suggests a different approach. 

Eastgate Mall opened in 1967 at Nine Mile Road and Laburnum Avenue in eastern Henrico County. 

It later became Fairfield Commons and dwindled steadily until only a few businesses were left before it was closed last year. But there is a plan in place for the rebirth of the 30.6-acre mall. 

Azalea Mall was the Southeast’s first enclosed mall when it opened — with a few businesses in 1962 and then the whole mall in 1963. Most of the mall’s 49-acre tract is in Henrico, with strips of the property — along Brook Road and Westbrook Avenue — in Richmond. 

Azalea was demolished in 1999 — only a garden center still operates on a corner of the property. Ideas for revitalization have come and gone in the decades since it was leveled. 

The International Council of Shopping Centers does not track shopping mall closings, said Jesse Tron, a spokesman for the New York-based organization. 

Malls typically evolve with changes in local demographics and economy — and the presence of newer, larger malls, Tron said. 

In the Richmond area, competition intensified exponentially over the decades with the openings of Regency Square, Chesterfield Towne Center and Virginia Center Commons and more so in 2003, when Short Pump Town Center and Stony Point Fashion Park opened. 

“The vast majority of malls are still open,” Tron said, “but many of them get re-purposed. … They become neighborhood shopping centers, perhaps with grocery anchors, or power centers with a couple of big-box retailers. Often, it depends on an owner who is willing to invest in a mall, or to sell it to an investor.” 

Crosland Southeast, the retail development firm spearheading the Stonebridge project on the former Cloverleaf site, doesn’t flinch at the prospect of reviving dead malls. Besides Stonebridge, Crosland Southeast currently has two similar developments underway in Tennessee. 

Still, James F. Downs, a partner with Crosland Southeast, cautions, “Not every dead mall is a candidate for successful repositioning.” 

Though the project has been complex and time-consuming, Downs said from his Charlotte, N.C., office, such developments offer high returns, and not just for the developer. 

“Regional mall redevelopment … can be transformative for communities,” Downs said. “We believe that this type of redevelopment has the potential to not only be profitable, but can also be catalytic in nature, facilitating additional growth and redevelopment within the surrounding area.” 

Cloverleaf took its time getting to where it is now. It went through different owners as it lost customers and anchor tenants in the 1990s and early 2000s. 

The county, determined to bring the property back in a planned fashion, purchased the 83-acre site in phases, finishing in 2009, after a dispute with a family that owned part of the property, and before that with a religious organization that wanted to establish a megachurch there. 

Chesterfield purchased the property for $16.15 million and is selling it to Crosland Southeast in phases for $16.27 million. 

Crosland Southeast bought its first segment in 2011 and, by late 2012, had the region’s first Kroger Marketplace, a 123,000-square-foot store, up and running as the development’s anchor. 

Kroger spokeswoman Ann Jenkins said sales performance at that Marketplace store has “consistently improved since the opening.” She said Kroger is pleased “to be a part of the revitalization of the former site of the Cloverleaf Mall, and we’re very happy with the new tenants that have come in that we now consider our neighbors.” 

In January 2014, Crosland Southeast made an impact on the community’s collective sweet-tooth when a Krispy Kreme Doughnut Factory opened there. 

About 28,000 square feet of retail space has been built already, with all but about 2,400 square feet accounted for, according to Chesterfield officials, and active negotiations are underway for additional outparcels. 

A second retail phase is planned. 

In 2013, Crosland Southeast sold 16 acres to Virginia Beach-based Boyd Homes for a 600-unit apartment complex on the property. 

Boyd Homes broke ground two months ago on Phase I of Element at Stonebridge, 400 units in three four-story buildings. 

Boyd Homes President David S. Rudiger said he expects the first phase will be open by summer or fall 2016. 

The complex, with apartments ranging from 560-square-foot studios to two-bedroom units more than double that size, will include a fitness room, a meditation garden, a salt-water pool, a fire pit and an outdoor kitchen area with bar space. 

H. Garrett Hart III, assistant director of Chesterfield Economic Development department, said the county estimates the investment in the project at $120 million, including the apartment complex. 

And, Hart said, he expects the apartments to spark the next phase of the project’s retail arm. “Crosland is actively marketing Phase II,” he said. 

Downs of Crosland Southeast said public-private collaboration is essential “in the success of a dead mall redevelopment” and the county assisted with the demolition of the mall and new public infrastructure. 

“Absent this public investment,” he said, “Stonebridge would not have been realized.” 

Can Eastgate Mall/Fairfield Commons be the area’s next moribund mall to have life breathed back into it? 

Joshua W. Rector hopes so. He is a senior vice president/director of development for Arizona-based Bromont Developments LLC, the company that is buying the 30.6-acre site and redeveloping it. 

Last week, Rector said Bromont should close by the end of April on its purchase of the mall property from Chiocca-Talley Malls Inc., which paid $2.9 million for the mall in 1996. 

The mall’s current structure will be demolished — starting soon, he said — and rebuilt as Eastgate Town Center, anchored by a 189,000-square-foot Walmart Supercenter. 

Walmart will own the store it builds and about half the mall’s acreage, Rector said. “We’ll deliver a finished pad.” 

Peebles department store, a tenant when the mall was closed, will be back, he said. 

Hibbett Sports will be part of the mix, as will Citi Trends, Planet Fitness and Simply Fashion. He said negotiations are underway to fill more of the mall’s retail space — slightly more than the 300,000 square feet of the old mall. 

When the plan for Eastgate Town Center was announced in June, Rector had hoped the mall would open as soon as late this year. 

“You’re always optimistic,” he said, “and it always takes longer than you think. Now my optimistic target is summer of 2016. My safe target is fall of 2016.” 

The mall is of special interest to two Henrico supervisors. 

Frank J. Thornton’s Fairfield District includes the mall property, and he once lived in the neighborhood. 

Tyrone E. Nelson’s Varina District spreads east and south of the mall and, in the 1990s, Nelson managed a pharmacy in the center for about two years. 

Thornton said malls “are like people. They go through three stages — birth, prosperity and decline.” 

To fend off decline, he said, “malls have to keep up with the taste, wishes and lifestyles of the customers who shop there.” 

Thornton sees the new development as a timely factor in the revitalization of the community around the mall. 

Nelson agreed. 

“Malls typically have a 20- to 30-year life,” he said, remembering when he managed the pharmacy and the mall was well into its third decade. “Even then, the mall was just a shell of what it had been. 

“I think it’s the right time for the rebirth of this mall,” Nelson said, “not just for the developer, but for the whole Nine Mile Road corridor. 

“Frank and I have encouraged the development,” he said. “We made sure the process kept moving along.” 

Brian Glass, a senior vice president for Colliers International’s commercial real estate brokerage office in Henrico, has closely followed the local mall scene. For instance, he represented the seller in the Fairfield Commons deal. 

That transaction, he said, depended on getting a commitment from the anchor tenant, Walmart. 

“It takes a lot of money to redevelop these properties,” he said. 

If there is a process moving toward something new on the 49 acres where Azalea Mall once stood, that process is not obvious. 

The Azalea Mall Garden Center is on one corner of the mall property. Garden center owner Mike McLaughlin has been there more than two decades, operating 10 months out of the year. 

“We lost a lot of customer traffic when the mall closed,” he said, “but there’s still enough to stay in business.” 

He said Atlanta-based Dewberry Capital Corp., the Azalea Mall property owner since 1998, has been a good landlord. 

Other than McLaughlin’s business and a building that was once a bank branch at a Brook Road entrance, the property is little more than beaten-up fences and scruffy vegetation struggling to break through cracks in the site’s old asphalt. 

Over the years, several what-might-be ideas have sprouted regarding the property. 

A little more than a year ago, a Cushman & Wakefield | Thalhimer online graphic proposed a new development to be called Azalea Square. “Now pre-leasing,” said a tag on the diagram. 

The graphic called for a 301,200-square-foot shopping center that would include an 84,100-square-foot Martin’s Food Markets grocery as a proposed anchor. 

At the time, Martin’s spokesman Chris Brand said, “I can confirm that we have expressed interest in the site.” 

Since then, nothing — at least nothing apparent to the public — has advanced the plan. 

On March 20, the Brook Run shopping center, on Brook Road about a mile north of the Azalea Mall property, announced that Martin’s had extended its lease on a store there. 

The length of the extension was not disclosed. Brand declined to comment on what it means for any prospect of a Martin’s anchor on the Azalea Mall property. 

Dewberry Capital did not return calls last week seeking comment. 

Randy R. Silber, Henrico’s deputy county manager for community development, said the county has hopes that the Azalea Mall tract will be developed. 

“It could become a retail center again,” Silber said, “or perhaps a mixed-use development with office, retail and residential. … But at this point, the property owner has not shown any interest in moving in any direction.” 

J.F. “Jeff” Williams III, a retired commercial real estate broker who was with the former Harrison & Bates, does not see the Azalea Mall property becoming a regional retail draw again. 

“It can be developed as a neighborhood shopping center,” he said. “It could draw customers from a mile and a half to three miles — it isn’t going to be anything more than that.” 

He sees possibilities there for a mixed-use project, but said Dewberry Capital “has not been overly active in creating a new mixed-use development.” 

Thornton, the Henrico supervisor whose Fairfield District also includes the Azalea Mall tract, said he hopes it can be redeveloped. 

Asked for a timetable, he didn’t have one. Dewberry Capital, he said, “is basically just sitting on the property.”