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The new owner of University Place mall in Chapel Hill says it wants to transform one of the Triangle’s oldest shopping centers from a “half-dead mall” to a “vibrant” town center.
Ram Realty Services — a Florida company with a long history of building in the area — bought the aging mall on Dec. 27 for $51.6 million from Madison Marquette, according to Orange County property records.
The 1970s-era mall is anchored by Silverspot Cinema and gourmet grocer Southern Season and has, like many indoor-shopping malls of its era, struggled to retain tenants and attract foot traffic in recent years. However, despite the struggles on the retail side, the mall’s previous owner has been successful in attracting a smattering of high-end restaurants to open there in the past couple years.
Plans for the 40-acre property — which includes a Harris Teeter grocery store and several other standalone buildings — are not finalized, but the property’s future will likely include new construction.
“There is a whole host of uses we are considering, but it’s about a balance to make it a vibrant space rather than a half-dead mall,” Ram Realty CEO Casey Cummings said in a phone interview.
“We are definitely going to build buildings in the parking lots,” Cummings added. “Exactly where and how they connect to the existing space is still in planning ... but we plan to add uses that would be new (to the property) and residential is one of them, but we are also considering office and lodging.”
Cummings said changes to the property will come in phases, with the first phase looking a lot like what is already happening at University Place. For the past few years, the previous owner, Madison Marquette, had been attempting to renovate the mall and attract new tenants, such as Stoney River Steakhouse and Grill and the taqueria Bartaco.
“We will certainly continue to do some of the things Madison Marquette has already done,” Cummings said. “A good example is what they did with Bartaco. You will continue to see that trend of more outside spaces and outside-facing store fronts.”
The addition of new tenants could happen toward the end of 2019, and it is likely several existing tenants will be asked to move around and some could expand, Cummings said.
Changing retail landscape
The sale of University Place marks another transition for one of the region’s legacy malls.
In Durham, the aging Northgate Mall was recently bought by a private equity firm for $34.5 million, after the mall’s longtime owners faced financial struggles. Northgate’s new owners have yet to reveal their plans for that mall.
And while the sale of University Place had a large price tag, it actually represents a decrease in the property’s value from just a few years ago. The property last sold in 2016 for $60.3 million, according to county land records — a decrease in value that could be explained by the negative view of indoor-shopping malls right now, Cummings said.
“I think there is a general sense in the real estate capital markets that malls and enclosed malls are bad and ... are deeply challenging and will have an uphill battle to stay relevant,” Cummings said. But “we think retail is still location driven and this location, regardless of whether it had buildings or not or had been an outdoor mall, we still would’ve liked it.”
Ram Realty has long been attracted to the Chapel Hill market. The company previously built the 140 West mixed-use condominiums on West Franklin Street in downtown Chapel Hill, and now is building the 272-unit Fordham Boulevard Apartments on the old Days Inn property on South Elliott Road, a short walk from the mall.
It also owns Elliott Square, a strip shopping center next to the apartment project. (Ram Realty plans to make aesthetic improvements to Elliott Square this year, as well as add three tenants: Trek Bikes, Haw River Grill and Noire Nail Bar.)
Dwight Bassett, an economic development officer for Chapel Hill, told The News & Observer and Herald-Sun last week that the sale presents a new opportunity to boost the town’s commercial base. For years, Chapel Hill has seen many retailers move to Durham or Mebane, taking with them valuable commercial sales tax dollars.
“We do lose quite a bit of retail, and the [Town] Council has had interest in seeing retail growth,” Bassett said. “But it’s really hard to capture.”
The two biggest challenges to the transformation of the mall could be its location just on the outside of the town designated “Blue Hill District” and its location in a floodplain.
Projects in the district — located along East Franklin Street and Fordham Boulevard — are built according to a form-based code that streamlines the town approval process and is supposed to create predictable results. The goal is to transform a car-centric commercial district into an urban, walkable community of apartments, shops and offices — though the district has faced criticism.
Cummings sees University Place as an extension of that district — where it already owns two properties — but because it lies just outside the district, the company will have to ask the town for several approvals. Cummings said Ram Realty wants to work with the town.
“We are not anticipating and we are not set up to go through a protracted battle, so I think this will be collaborative,” he said. “One benefit of having that amount of land and existing buildings is we have a fair amount of flexibility for different uses.”
Another large influence over the property’s future will be its presence in a prominent floodplain. Significant changes to the property would likely be expensive, because it is in the 100-year floodplain for Bolin Creek.
Only Chapel Hill Tire, Harris Teeter and the K&W restaurant are situated outside the Bolin Creek flood hazard area.
While town rules allow construction in floodplains, the new buildings must be built using flood-proof materials or on land that has been raised at least 2 feet above the site’s base flood elevation.
The base flood elevation at University Place is 263.86 feet – it now sits at roughly 260 feet – meaning at least 5 feet of fill dirt would have to be added to the site before redeveloping or replacing the mall.
The mall’s parking lot has previously been upgraded, largely to deal with flooding after millions in damages from a 2000 flood. Several bio-retention basins filled with sandy soil and plants were added and appear to have limited flooding in recent years to sections of the parking lot.