(For more retail coverage, click GlobeSt.com/RETAIL.)
MONROE, NC-Madison Marquette has acquired Monroe Mall, a 350,000-sf regional mall here, for $19.7 million in cash and assumed debt. The Washington, DC-based investment firm says it will begin an "extensive rehabilitation and repositioning" of the 45-acre property beginning this fall that one company source tells GlobeSt.com may also include a substantial expansion.
The property is about 92% leased. Anchor tenants include Belk, Sears and JC Penney, all of which have substantial time remaining on their leases. Additional tenants include Peebles, Pacific Sunwear, Bath & Body Works, Walden Books, GNC, Radio Shack and Hibbett Sporting Goods.
Tom Falatko, managing director of Madison Marquette's southern investment activities, tells GlobeSt.com that despite the 92% occupancy and the long-term anchor commitments, significant lease expiration and rollover is in store for the shop space over the next 30 months. That's good news, says Falatko, because it will allow it to change the merchandising mix along with its rehabilitation.
"The recapture of that in-line space is where we see some opportunity," he says. "Anchor performance is healthy, but [sales in] the interior of the mall hasn't kept pace with the community."
Madison Marquette, which acquired the property well below replacement cost, is currently mulling its options for repositioning the property, which is over-parked. Preliminary research indicates a potential to expand the property by 100,000 sf without the need for structured parking. With regard to the enclosed mall shop space, Madison Marquette is currently studying the financial feasibility of converting some or all of it to an open-air format.
Falatko suspects Madison Marquette won this deal because other bidders overlooked the property's potential, instead seeing only its smaller size, the outdated enclosed mall, the poor performance of the shops therein. "We saw all that as an opportunity given the roll," he says. "We've had conversations with a lot of strong retailers that are now pending on our creation of a new environment there."
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