Executives of mall owner and operator Hull Property Group said Wednesday that they had closed on the $13 million acquisition of the struggling Chesterfield Mall. The mall’s new owner said it was prepared to invest the needed resources to reinvent the property, which remains open to customers, but stressed that the company couldn’t do it alone.
“We need to work together and agree that the mall and the surrounding area is too important to fail and become a permanent blight,” said John Mulherin, vice president of government relations for Hull Property Group. “We must determine how to revive a future for this property and the surrounding area in a manner that is financially feasible and supported by the community.”
Hull Property Group’s Marketing Director Coles Hull Doyle said it was too early to talk about specifics or potential plans for the mall. “We have begun conversations with local leadership and have not discussed any incentives at this time,” she said in an email to the Post-Dispatch. “For now we are focusing on a myriad of property specific issues that impact the speed in which we can begin substantive redevelopment discussions.
Chesterfield City Administrator Mike Geisel previously said the city had little appetite to provide tax incentives to help spur redevelopment of the mall.
Hull Property Group also could be referring to cooperation needed among multiple owners that have a stake in the mall. Dillard’s — which never reopened after a September 2016 water main break — owns its real estate attached to the mall, as does Macy’s. Overland-based Staenberg Group acquired the Sears property connected to Chesterfield Mall in April and made a bid to buy the mall this year. Each of those entities will have a say in how the mall gets redeveloped .
Jim Hull, managing principal of Hull Property Group, said he’d work to build a consensus with community and civic leaders about the future of the site. The firm must also resolve litigation regarding the mall’s tax valuation.
“If we can’t arrive at a shared vision for the future of this very important property and, indeed this entire area, and work together to achieve that vision, then the marketplace may dictate an unfortunate and unforgiving future,” he said.
Geisel told the Post-Dispatch Wednesday that he was aware of the deal but hadn’t yet had conversations detailing what, if any, incentives Hull Property Group might seek in its redevelopment efforts.
Hull Property Group has more than 14.5 million square feet of retail real estate in its portfolio. Most of those properties are traditional shopping malls situated in the southeastern United States.
The firm bought the Alton Square Mall in 2015 and is using tax increment financing to develop that property. The city and developer are now in negotiations to revisit the initial $24 million cost assessment provided by Hull Property Group and how much the city is willing to subsidize.
C-III Capital Partners, which took control of Chesterfield Mall through foreclosure in mid-2017, put the mall up for sale in March.
Chesterfield Mall is the largest in the St. Louis area at 1.3 million square feet of space, but it has struggled in recent years to compete with two new outlet malls that opened nearby.
Increasingly, owners of struggling malls are adopting a buy-and-hold strategy, in which they invest little money into the properties.
Chesterfield officials have stressed their desire to see meaningful redevelopment of the property.
Geisel previously told the Post-Dispatch that a large-scale mixed-use development plan with room for retail, restaurants, office space and apartments or condominiums was preferred. A redevelopment could be similar to the Streets of St. Charles in St. Charles or The Boulevard in Richmond Heights, only bigger, he said.
Executives with TSG have said they envision an open-air, high-end mixed-use project with residential, office, retail, restaurant, theater, health club and supermarket components.
Occupancy at Chesterfield Mall has fallen to 63.8 percent from 96 percent in 2013 — the last time the mall’s previous owner, CBL Properties, disclosed such figures — according to NAI Global, which was marketing the property on behalf of C-III.
Chesterfield Mall has an appraised value of $12.4 million, according to research from Trepp, a provider of data to the securities and investment industries. The appraisal is down drastically from $286 million in 2006. The mall has an appraised value on file with St. Louis County of $36 million.
According to data from research firm Reis Inc., vacancy rates at U.S. regional malls hit 8.4 percent in the first quarter of 2018, up from 7.9 percent in the prior year period.
St. Louis’ malls have reported similar results.
Taken collectively, St. Louis’ seven regional malls — Chesterfield Mall, Mid Rivers Mall, Plaza Frontenac, South County Center, St. Clair Square, St. Louis Galleria and West County Center — are also at a six-year high for vacancy.
At the end of last year, the average vacancy rate for those malls was just less than 11 percent, a figure driven mostly by Chesterfield Mall’s abysmal 36 percent vacancy rate. But even excluding Chesterfield Mall, area malls are at a six-year high of nearly 7 percent.