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Mar 3, 2010 1:51 AM |
http://www.azcentral.com/business/ar...enter0303.html
Quote:
Westcor is 'transitioning out' of beleaguered Metrocenter
'Changes in consumer-shopping patterns no longer favor large indoor malls,' including former crown jewel in Phoenix
12 comments by Max Jarman - Mar. 2, 2010 05:38 PM
The Arizona Republic
Westcor plans to pull out of the landmark Metrocenter mall and leave its former partners with the task of inventing a viable future for the troubled property.
The longtime Phoenix mall developer confirmed it is "transitioning out" of the management of the 1.4 million-square-foot center and will give up a 15 percent ownership stake in the property.
Vice President Scott Nelson said Westcor's involvement in the center no longer fit with the other owner's plans for the 107-acre site at Interstate 17 and Dunlap Avenue in Phoenix.
"The majority ownership has different goals and business objectives for the property that we were not a part of," Nelson said.
The mall's owners, Somera Capital Management of Santa Barbara, Calif., and Boston's AEW Capital Management, did not return calls for comment on their plans for the property.
Once the Phoenix area's leading mall and the crown jewel of Westcor's retail holdings, Metrocenter has been in decline.
The former middle-class neighborhoods surrounding the mall have become increasingly working class, and rising crime in the area has driven many shoppers to newer malls in other parts of the Valley.
Two of the mall's anchor spaces have been vacant for years, and the Dillard's department store now sells only clearance merchandise.
Metrocenter is about 23 percent vacant.
"The area has become retail-challenged," Westcor's Nelson said.
Westcor has been working with the Urban Land Institute, a real-estate-oriented public-policy group, and Phoenix City Councilman Thelda Williams to reposition the mall and surrounding property.
"The area needs to be rethought," said George Bosworth, executive director of the Urban Land Institute in Phoenix. "Demographics and changes in consumer-shopping patterns no longer favor large indoor malls."
At the request of the city, the ULI convened a committee to study alternative uses for the property and presented findings to the city in November.
The group suggested that vacant retail space in the mall could be used for administrative offices for the health-care industry and private schools and universities could be encouraged to move into now-vacant retail space in the center.
Bosworth said that the area already has a number of private universities and colleges and that there is an existing health-care presence with the nearby regional offices for Blue Cross Blue Shield.
"They would be building on a critical mass that already is in the area," he said.
The ULI study also suggested bringing light rail to the mall to help rejuvenate the property.
"We need to reconfigure the mall and peripheral-land uses over a longer period to bring stronger uses to the area," Bosworth said.
That will take a huge collaborative effort among Phoenix, the mall owners and other parties, according to Nelson.
Although Westcor won't be part of the process, it is working to make a smooth transition out of the project.
"We're working with city management and the City Council to pass the baton to whoever will be the champion and steward of the project going forward," Nelson said.
But it's unsure where the mall owners stand with the recommendations. Bosworth noted that neither Somera nor AEW has communicated plans for the property beyond its current operation.
Westcor founder Rusty Lyon Jr. developed Metrocenter in 1973 with Homart Development Co., the real-estate division of Sears, Roebuck and Co. It was one of the largest malls in the United States and thought to be the first to have five anchors: Sears, Rhodes Brothers, Diamond's, Goldwater's, and Broadway. Rhodes and Diamond's became part of Dillard's and Goldwater's and Broadway are now part of Macy's.
Metrocenter was sold in the 1990s to DVM Co., a joint venture of Simon Property Group and Lyon. In 2005, Metrocenter was sold to Somera, a real-estate investment-fund manager, and AEW, a pension-fund adviser. Westcor was given a contract to manage the mall, and Macerich Co., which acquired Westcor in 2002, took a 15 percent stake in the project.
Westcor is the dominant mall owner in Arizona, with an ownership interest in 32 planned and existing malls and shopping centers.
Macerich last year sold a 49 percent interest in Chandler Fashion Center to raise cash.
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Welp this is good news in that it may mean some new future for that area and some (though small) shred of hope for redevelopment. Indoor malls are creepy, unnatural places of the past. Ones in real affluent areas (Chandler and Scottsdale Fashion) will probably always do OK, but their such awful places to be its time to bulldoze places like Metro. Hopefully someone with a brain will develop it in a TOD fashion w/ the potential future LRT being nearby.
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