The Indianapolis-based mall REIT not only owns the only three major malls here, but it also controls three smaller centers, two existing and one under development, and next quarter will begin closing on 100 acres that eventually will give it a fourth major mall here. When its developments are complete, Simon will control more than six million sf of space in the greater Austin market, well more than any of its other markets.
"It's obviously an important market for us," a source at Simon tells GlobeSt.com. "And we like it for obvious reasons; it has a diversified employment base, it's the state capital and it has a big state university."
The latest major mall deal is for the undeveloped portion of IBM's former 256-acre Domain campus, which totals 97 acres; the rest of the property is built out with about two million sf of office space. The seed work for the development was done by the locally based Endeavor Real Estate Group, which optioned the vacant land in June 2002 from a partnership that includes Blackstone and JER and proceeded to entitle it for about 1.3 million sf of retail space.
The specific financial arrangement between Endeavor and Simon is being held close to the vest, however; sources at both companies tell GlobeSt.com that Simon will own "a significant amount" of the 55 acres or so that will become a 780,000-sf, Neiman Marcus-anchored, open-air shopping, dining and entertainment village, and also holds the option to acquire the adjoining 42 acres that is slated to hold 500,000-sf promotional big-box type tenants in a second phase of development.
Endeavor principal Chris Ellis tells GlobeSt.com that his company will remain a joint venture partner with Simon. Simon will take the lead on leasing and developing the land, he says, while Endeavor will be heavily involved with the design, layout and tenant mix. As part of a 20-year, $25-million performance-based incentive package from the city consisting mostly of sales tax rebates, Ellis says the project will include at least 300 apartment and townhome units.
Regarding the 55-acre first phase, Ellis says the focus right now is on landing more anchor tenants. While Neiman is the only one signed--for an 80,000-sf, two-level store--Ellis says they are "very far down the road with a second, pet store anchor," and that the May Co.'s Foleys department store chain "is someone we've been talking to."
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