Struggling Greenspoint mall finds a buyer at last

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Greenspoint Mall may soon be little more than a memory to those who harbor nostalgia for the days when Houston shoppers crowded its corridors decades ago.

A group of investors has agreed to purchase the beleaguered property and transform it into a development that could include some mix of residential and commercial space. Global Plaza Union, led by Chinese developer Feng Gao, is considering three different concepts but declined to specify them before the sale is finalized.

“It’s a great opportunity for this area and an important redevelopment for the city of Houston,” said Reggie Gray, president of the Houston Intercontinental Chamber of Commerce and a partner in the project. He expects the transaction to close within the next four months.

The proposed sale culminates a years-long effort to either reinvent or sell the shopping center, the epitome of the “dying mall” that has come to encapsulate broader challenges in the retail industry. Empty and gated stores line mostly vacant corridors traveled by a dwindling number of shoppers.

The mall’s operator, Triyar Cannon Group, listed the property with Colliers International early last year, presenting it as a redevelopment opportunity. It eventually allowed the partnership to lapse.

Ace Schlameus, senior vice president with Colliers in Houston, for months marketed the mall to potential buyers with little success. The property needed an investor willing to dedicate years to its redevelopment.

“The real key is finding someone who has some deep pockets that is patient,” he said.

The Greenspoint area has long struggled to attract and retain businesses, but several high-profile projects have recently energized the area. Amazon, the e-commerce giant, last month began operating a fulfillment center in the Pinto Business Park just a few miles southwest of Greenspoint Mall.

That activity will likely spur greater investment in the area, said Ed Wulfe, founder and CEO of commerical real estate firm Wulfe & Co., benefitting the proposed redevelopment project.

“It’s a very good real estate play,” he said, “It’s a strategic location that needs to be reinvented.”

Gao has developed a number of properties in Asia and established a U.S. company, WIT Union, to complete the Greenspoint project, his first in the U.S. He’s eyeing other opportunities.

At Greenspoint, his group faces several potential roadblocks. Sears, Macy’s and Dillards own their department stores at the mall independently of Triyar, and they must agree to sell the spaces before the redevelopment begins.

Dillards declined a request for comment, and Macy’s and Sears did not respond.

Gray said the investors have approached each company with purchase offers. If they don’t cooperate, he added, the project will fail.

“It’s an all or nothing kind of project,” he said.

Other redevelopment efforts have faced similar challenges, stalled by complex contractual issues between department stores and mall management. In Baytown, for example, an ambitious plan to turn the aging San Jacinto Mall into an open-air shopping center slowed this year during negotiations with Sears, Macy’s and J.C. Penney, the property’s oldest tenants.

Triyar once operated that mall, too, and faced similar challenges as foot traffic dwindled and tenants gave up. It sold the property two years ago to Fidelis Realty Partners, which hopes to finalize negotiations with the departments stores this year and begin construction next year.

The redevelopment efforts highlight a growing divide between the nation’s highest and lowest performing malls during a fraught time in the retail industry. The most dynamic malls, such as the Houston Galleria, have continued to generate money for reinvestment, while outdated ones have suffered compounding losses and spiraled into obsolescence.

That disparity is expected to hasten the death of other malls like Greenspoint and San Jacinto, sprawling centers hollowed out by a succession of closures. Investment firm Boenning & Scattergood expects as many as 255 of the nation’s 1,080 malls to perish within the next decade as the most successful ones edge out their weaker competitors.

Greenspoint dominated Houston’s retail scene when it opened in 1976 as one of the largest malls in the region, an air-conditioned modernity spanning 1.4 million square feet. Foley’s, Montgomery Ward and other 20th-century department stores drew heavy traffic, thrilling shoppers with yesterday’s luxuries.

But newer malls, including Willowbrook, Deerbrook and The Woodlands, enticed shoppers to drive farther north, and a series of several high-profile shooting deaths in the 1990s tarnished Greenspoint’s reputation. By the end of that decade, the mall had lost its status as North Houston’s shopping destination.

J.C. Penney pulled out of the center around that time, a harbinger of the challenges to come for department stores as online shopping and discount retailers grew more popular. Sears closed its location there in 2010, and the Macy’s store went dark earlier this year.

The closures triggered a domino effect within the mall, toppling smaller tenants that relied on the anchors to attract customers. Now, Dillards and Palais Royal are the only department stores left operating there, and the other remaining tenants sell mostly cheap apparel and discount goods.

City and local officials are banking on Greenspoint’s redevelopment as an economic catalyst for an area. Greg Simpson, president of the North Houston District, said the latest plans are a welcome indication that developers share in that vision.

“The fact that someone sees the potential in that site and has the interest in redeveloping it is great news,” he said. “It’s indicative of the positive activity that’s happening across our district.”

SOURCEHouston Chronicle
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