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Tampa Bay Area
Business Observer Friday, Mar. 30, 2018 5 months ago

Anatomy of a retail transformation

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The owners of Tampa's University Mall are exploring a new path for success at the 96-acre property.
by: Kevin McQuaid Commercial Real Estate Editor

In its prime some three decades ago, University Mall dominated the retail landscape in its section of Tampa the way regional malls across the nation did.

Department store anchors like Sears, Roebuck & Co., J.C. Penney, Macy’s and Dillards were shopper magnets that drew in customers and supported inline merchants and ancillary retail in the surrounding area.

But as shopping habits changed and new retail spaces attracted University Mall’s customers, the mall languished. By the time New York-based RD Management LLC acquired the 44-year-old property in late 2014 for $29.5 million, the mall was struggling with tenant losses, tired anchors and heightened competition.

“It was a traditional mall structure, and as such, it worked well in that traditional model for decades,” says Christopher Bowen, RD Management’s chief development strategist, who was hired at the end of last year to revamp the mall.

But that model, for the most part, works no more.

Traditional retail hubs throughout Florida and the U.S. are increasingly becoming casualties of online shopping. Successful malls, in many cases, are those that have converted retail space to nonretail uses.

To be successful, owners of older malls like RD Management are having to recast their properties to appeal to the shoppers of 2018 as well as the consumers of 2038.

At University Mall, Bowen and RD Management are consolidating ownership at the 1.3 million-square-foot mall — anchors like Sears, Dillard’s, Penney and Macy’s had previously owned their own stores there — through nearly $25 million in acquisitions.

RD Management’s most recent purchase came earlier this month, when it spent $7 million to buy Sears’ store and an affiliated auto repair center.

“For the first time in its history, now, University Mall will have a single owner,” says Bowen, 59, who joined RD Management after a more than three-decade career developing health care properties — many that integrated with retail centers.

"Our biggest challenge is the perception of the area. So I ask everyone to look at what can be done here."
— Christopher Bowen

RD Management also is formulating a plan to redevelop the mall into a mixed-use, open-air project that will include office space, entertainment, hotel rooms, residences and educational and medical space — a redevelopment that could total between $1 billion and $2.5 billion by the time it is completed, likely around 2028.

Just as importantly, Bowen is working to rehabilitate the area around the 2200 E. Fowler Ave. mall, which has largely failed to participant in this cycle’s economic resurgence despite the presence nearby a Shriner’s Hospital for Children, the H. Lee Moffitt Cancer Center’s headquarters and the main campus of the University of South Florida.

“The real estate crash of the last decade really hurt the area around University Mall,” says Bowen, the former managing director of a development arm of Wisconsin health care contractor Marshall Erdman & Associates.

“As a result, the university area did not have a recovery the way many areas around Tampa have. But it has good bones and there’s an opportunity for a significant recovery if we make some smart moves. We know we have to do some heavy lifting, though.”

Part of that lifting will come in form of reconnecting the mall property to the greater Tampa metropolis. To that end, RD Management is changing the name of the mall to “Uptown.”

“Everyone tends to look at the mall as divorced from the rest of the area, as a stand alone,” Bowen says. “But it’s really an important component in the entire metro area, a 100-acre tract that connects to what’s happening on Water Street. Tampa has a pretty traditional metro stack: There’s downtown, midtown and uptown. Hence the new name.”

For starters, Bowen hopes to integrate USF and Moffitt into the redevelopment process.

“They’re powerful economic engines, and our property can be a real uniter for the whole area,” Bowen says.

Eventually, he contends Fowler Avenue could become a crossroads for the growing biotech and computer science nexus that is beginning to gel in Tampa.

Back at the mall, Bowen says the first manifestation of the larger transformation will come this summer, when the former J.C. Penney store, vacant since 2005, is razed.

Retail experts says RD Management, which owns a dozen properties across Florida — including Merchants Crossing in North Fort Myers and The Groves in Lakeland — and 150 nationally, is well equipped to tackle the complex renovation at University Mall, and its plan for the property is a solid one.

“What makes sense there is mixed use,” says Patrick Berman, a senior director at commercial real estate brokerage firm Cushman & Wakefield, in Tampa, who specializes in retail properties.

“University Mall is 96 acres, a huge parcel, and it’s surrounded by a number of employment centers. There’s so much traffic that goes by there every day, and it would be a great place to live, work and play.

“It’s got good visibility, too, all of the ingredients that support a hotel, medical use, offices and residences,” Berman adds. “Because what works for retail works for the other uses as well.”

University Mall in Tampa is undergoing a $1 billion transformation that will add offices, residences, hotel rooms and other uses to the 96-acre property.

Bowen notes that the mall’s transformation isn’t dependent on Penney’s possible demolition. Already, Dillard’s has shifted locations in the mall; Studio Movie Grill has opened a 14-screen theater with 3,000 seats; and Portillo’s and Miller’s Ale House have debuted new eateries.

Sears will remain open during the mall’s renovation, and anchors Burlington and Grand’s are expected to stay, too.

But Bowen acknowledges that despite a plan for the future, Uptown still faces considerable obstacles.

“The biggest issue we have is not financial, it’s not physical, it’s not even the state of the retail market and all the changes taking place in the industry,” Bowen says.

“My biggest challenge is the perception of the area. So I ask everyone to look at what we can be here. We have a vision to help give the community what it deserves.”

 

 

 

 

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