Subscribe for 99¢
Hazelwood outlet mall owners seek non-retail tenants

FILE PHOTO: Hope Church signed a 40,000 square-foot lease with the owners of the St. Louis Outlet Mall in Hazelwood, that will be anchored by the former corner Books-A-Million corner location, (left), photographed on Thursday, July, 27, 2017. Photo by Christian Gooden, cgooden@post-dispatch.com

Ross Dress for Less is suing the owner of the struggling St. Louis Outlet Mall in Hazelwood, alleging the discount department store chain is owed some of the rent it was charged as the mall failed to keep its tenants.

Ross Dress for Less, based in Dublin, Calif., opened its 35,000-square-foot store at the outlet mall at 5555 St. Louis Mills Boulevard in 2012. The 10-year lease it signed included provisions that allowed for reduced rent should the mall fall below 60 percent occupancy and the ability to terminate its lease if those conditions continued for a two-year stretch.

The lawsuit said Ross in March 2017 notified the mall owner, St. Louis Retail Outlet LLC, an entity operated by New York-based Namdar Realty Group, that the mall had fallen below that threshold as of May 2015 and that Ross was therefore entitled to the lower rental rate. The suit also said Ross Dress for Less was due overpaid rent for the period between May 2015 and February 2017.

Namdar acquired the 1.2 million-square-foot mall out of auction for $4.4 million in 2016.

Ross Dress for Less sent another letter to Namdar in February 2018 notifying the firm that the reduced occupancy allowed the chain to terminate its lease as well as recoup its overpaid rent, which by that point had totaled $142,520.

Namdar, in a response sent to Ross Dress for Less in early March, disputed the retailer’s claims, arguing tenancy was above the 60 percent threshold but did not provide documentation supporting the position, the lawsuit said.

Executives with Namdar did not respond to requests for comment.

Ross Dress for Less, according to the suit filed Monday in federal court in St. Louis, is seeking to recoup overpaid rent in the amount of $121,000, gain approval for its right to terminate the lease and receive payment of leasehold improvements in the amount of $490,296.

When the Mills Corp. opened the $250 million mall 16 years ago, the property had about 200 tenants. Research from Trepp said the mall, formerly known as the St. Louis Mills, was 72 percent occupied at the end of 2014, the last time Trepp reported on the property.

Occupancy plummeted over the past decade, and only a handful of tenants remain, including Cabela’s, an 18-screen movie theater and the Ice Zone hockey rink that serves as the practice facility for the St. Louis Blues hockey team. The mall sought to attract nonretail tenants in recent years, adding Hope Church last year in space formerly leased to Books-A-Million.

Ross Dress for Less terminating its lease would actually be a positive for the developers looking to turn the Hazelwood facility into a $92 million regional youth sports complex called PowerPlex.

Big Sports Properties, led by former newscaster and former St. Patrick Center CEO Dan Buck, has the mall under contract but said redevelopment plans hinge on using the Ross Dress for Less space as well as the current Burlington store.

Ross Dress for Less vacating the space voluntarily would be one less hurdle for Big Sports Properties to clear as they look to close on the deal.

The proposal, including a 750-foot-long dome for indoor play, would put baseball fields and basketball and volleyball courts alongside entertainment, restaurants and retail on the site. Some current tenants could remain at the property.

Buck’s group still needs to overcome roughly $36 million debt held by a transportation development district established on the mall site.

The St. Louis Convention and Visitors Commission has agreed to contribute $6 million to help pay for the project. And the city of Hazelwood is offering to buy the outstanding TDD bonds to clear the way for Buck’s group to buy the mall property.

Some $6 million of a county contribution would go to the Hazelwood site to free up money for debt service. The city of Bridgeton is also partnering on the project, and $2 million would go toward turning the fields at the Bridgeton Municipal Athletic Complex just across Highway 370 from dirt to turf for tournament play.

Get updates every weekday morning about the latest news in the St. Louis business community.