Is Unibail Changing Its Mind About Dumping US Malls?

Unibail-Rodamco-Westfield has unveiled another big-ticket redevelopment for one its US malls, a $100M project that will transform the Old Orchard mall in Skokie, IL into a “live/work/play” mixed-use community.

URW, the largest mall owner in Europe, is following the same playbook it is using to renovate the 63-year-old Garden State Plaza in Paramus, NJ, adding residential units to the venerable NJ landmark.

The moves to reposition aging US mall properties comes amid signs that URW may be rethinking its decision earlier this year to divest all of its US mall holdings by the beginning of 2023.

At the end of October, the company raised its guidance for the second time this year as tenant sales for the first nine months of 2022 exceeded pre-pandemic levels, according to a report from Reuters.

Total tenant sales hit 103% of 2019 levels in the third quarter for URW, while foot traffic (known as “footfall” across the pond) at the company’s portfolio of more than 80 shopping centers in Europe and the US reached 91% of pre-pandemic levels, as of the end of Q3.

The Amsterdam-listed mall owner—which has been selling off its US assets this year as part of a $4.3B debt reduction plan—said it has delayed the completion of its debt reduction strategy until the end of 2023 due to current market conditions. Previously, the company said it would pare $4.3B in assets by the end of this year.

URW said its strong Q3 results confirmed a positive trend seen in the first half of the year, including “a return to more normal shopping trends with footfall and rent collection rebounding this year after two years of on-off restrictions to curb the spread of the coronavirus.”

URW calls its redevelopment of the Old Orchard mall a “landmark transformation,” the same phrase it used to describe the ongoing renovation of NJ’s Garden State Plaza.

The project in Skokie, to be completed by 2026, envisions converting one of the North Shore’s leading malls into the center of a thriving live/work/play community, including a new residential development, entertainment and dining options, green spaces with walkways, and mall retail that is re-tenanted with new retail brands that appeal to generational shifts in market demographics.

Old Orchard will be adding health and wellness tenants to the mix of mall retail outlets and will expand luxury retail with the second US store for Bloomies, Bloomingdale’s new curated shopping concept.

Unibail’s $100M commitment to the redevelopment came after Skokie’s Village Board voted to designate Old Orchard as an Illinois Business District, triggering economic development incentives for the project.

URW agreed to comply with Skokie’s recently enacted environmental sustainability plan. The company has committed to using sustainable building strategies in the renovation incorporating renewable energy, natural materials, “biophillic” design and biodiversity.