Tag Archive for: entertainment complex

25% Of U.S. Malls Are Expected To Shut Within 5 Years. Giving Them A New Life Won’t Be Easy

boynton beach mall

What is going to happen to America’s dead malls? That’s a million-dollar question plaguing retailers and real estate developers.

With a report circulating earlier this month that the biggest U.S. mall owner Simon Property Group has been in talks with Amazon to convert some shuttered Sears and J.C. Penney department stores into fulfillment centers, many industry analysts have been pontificating on the future of malls as logistics hubs.

The consensus seems to be that turning old retail space into new warehouses might not be so easy, even though it might seem like a logical solution. Demand for logistics buildings is skyrocketing as e-commerce sales balloon. But the hurdles include the need to have properties rezoned, which could be met with pushback from local municipalities.

“Just because retail space has gone vacant or remained fallow does not mean that it is automatically a good candidate for repurposing into industrial space,” the head of Moody’s Analytics commercial real estate economics division, Victor Calanog, said in a report just released. “One cannot simply build industrial buildings in areas zoned for commercial use. Often, that requires rezoning areas — a long and tedious process with a low probability of success. State and local governments typically tax industrial properties at anywhere from half to two-thirds the rate of commercial properties, so municipalities have little incentive to rezone areas from commercial to industrial use, as they will collect less tax revenues.”

Demand for various commercial real estate asset types is expected to shift noticeably because of the coronavirus pandemic, with more people now working from home, flocking to the suburbs for space and buying online things they used to browse for in stores.

According to data pulled by Moody’s Analytics REIS, apartment development in the U.S. is expected to be down 15.6% in a post-Covid-19 world. Office development is set to drop 10%, it said, while retail falls 15.7%. Industrial development, meantime, is expected to pick up 3.6%.

The firm did find five markets where it said it would make the most sense to covert vacant retail space into warehouse space, based on where retail has been underperforming and where warehouse demand is hot. Those are: Central New Jersey, Northern New Jersey, Long Island, Memphis and Detroit.

But shopping malls are likely going to be shuttering in suburbs all across the country, as store closures grow in number and landlords capitulate. Another new report out this week from Coresight Research estimates 25% of America’s roughly 1,000 malls will close over the next three to five years, with the pandemic accelerating a demise that was already underway before the new virus emerged.

The malls most at risk of going dark are classified as so-called B-, C- and D-rated malls, meaning they bring in fewer sales per square foot than an A mall. An A++ mall could bring in as much as $1,000 in sales per square foot, for example, while a C+ mall does about $320. There are roughly 380 C- and D-rated malls in the U.S., according to an analysis by the commercial real estate firm Green Street Advisors. It has said malls rated C and below “are not viable retail centers long term.”

CBL & Associates, a Tennessee-based mall owner that has a number of B- and C-rated malls in its portfolio, has said it plans to file for bankruptcy by Oct. 1, highlighting just how much pressure these landlords are facing. Even high-end malls are under pressure, though. No one is really immune. An upscale mall owner in Miami, Bal Harbour Shops, is currently moving to evict the luxury department store chain Saks Fifth Avenue for not paying rent since mid-March. It owes Bal Harbour roughly $1.9 million, according to court documents.

“Despite being given months to honor its past due rental obligations and despite Saks’ impressive post-COVID sales at Bal Harbour Shops, Saks steadfastly refused to make any effort to pay any part of its rent,” Bal Harbour Shops President and Chief Executive Matthew Whitman Lazenby said in a statement. “Bal Harbour Shops has worked tirelessly to ensure our business and our tenants can survive and thrive in this environment. Regrettably, this injudicious behavior has left us with no other option than to terminate the Saks lease and sue to evict Saks from Bal Harbour Shops.”

A representative from Hudson’s Bay-owned Saks was not immediately available to comment.

About 90% of occupants in U.S. malls are either experiential tenants like movie theaters, or department store chains and apparel retailers, according to the Coresight analysis. This makes malls the most vulnerable type of shopping centers to the Covid-19 impact, it said, compared with other properties like strip centers that have grocery stores and outlet centers that offer consumers bargains.

During the pandemic, movie theaters and clothing shops have faced long windows of being closed, while consumers could still flock to strip centers for food, cleaning products and other essentials. In some states, such as New York and California, movie theaters remain closed to this day. And so with minimal revenue coming in, these are the businesses that are most likely requesting rent reductions, or not paying rent at all.

Mall developers had up until now been courting entertainment companies like Dave & Buster’s and iFly indoor skydiving, and restaurants like Cheesecake Factory, to lessen their dependence on shrinking retailers. But those businesses have also not fared well in an age of social distancing.

So, if not warehouses and entertainment complexes, analysts have pondered other potential use cases for so-called dead malls: Churches, medical facilities, office spaces and even apartment complexes.

But even office space is a risky bet now, as the working-from-home trend could become permanent for some. Workers in JPMorgan Chase’s corporate and investment bank, for example, will cycle between days spent at the office and at home, keeping the ability to work remotely on a part-time basis. The world’s biggest Wall Street bank by revenue has said it could shutter backup trading floors located outside New York and London as a result of the move.

The outdoor retailer REI is also looking to sell its recently completed corporate campus in suburban Seattle, shifting instead to more satellite offices, as a result of the pandemic.

“Unfortunately, this whole Covid thing has thrown the experiential pitch out the window,” Moody’s Calanog said in a phone interview. “Until we resolve this pandemic, I suspect we are going to be in a holding pattern with hollow retail space. Then we will see what the most viable format is.”

View the CNBC news video ‘How Shrinking the American Mall Will Impact Local Tax Revenue‘ below.

Source: CNBC

200-Acre Project Could Bring Homes, Schools, Hotel, Park And More To One Of Palm Beach County’s Busiest Intersections

34309962 - silhouettes of construction and power lines at sunset

A Royal Palm Beach project could get more than 1,000 new homes, schools, a theater and more.

Brian Tuttle, head of Tuttle Land Development, said it has taken him about five years to assemble 200 acres in what he called one of the busiest intersections in Palm Beach County. He estimated his project, called “Tuttle Royale,” would have a market value of $650 million.

The plan, at Southern Boulevard and State Road 441, calls for 1,000 rental apartments, 100 single-family homes, a K-12 Sports Leadership and Management (SLAM) charter school for 1,500 students, a 200-student preschool, grocer, pharmacy with a drive-through, convenience store with an eight-pump gas station, a 150-room hotel and a 10-acre regional park.

There’s also 350,000 square feet of space for restaurants and entertainment offerings, including a 915-seat movie theater and a health club, according to city documents. The development would also include a street named Erica Boulevard, in honor of Tuttle’s daughter, who died unexpectedly at age 24 in 2016, he said.

The Royal Palm Beach Village Council tentatively signed off on the land use changes this month. There are hearings scheduled in September and October, according to the village clerk. More specifics will come once site plans are approved. Mayor Fred Pinto estimated it would take 10 years to build.

The land, sandwiched between Wellington and West Palm Beach, was mostly empty except for a dog rescue facility, which has since moved, as well as a handful of single-family homes, most of which have since sold, the mayor said. The land was annexed into Royal Palm Beach within the last few years.

Pinto said he hoped village residents could take advantage “of the entertainment venues” instead of having to drive to West Palm Beach.

As for the potential for increased traffic, Pinto said, “Anything you do there’s always going to be traffic.” But he added, “we’re not creating more traffic internally in the village. The traffic is confined to the people who live in the development or visitors for the entertainment.”

 

Source: SunSentinel

,

Developers Reimagine South Florida’s Money-Losing Golf Courses

golf course

The Carolina Club, an 18-hole championship golf course in Margate, has served as a qualifying site for the PGA Honda Classic and is known for its fast, well-manicured greens and contoured fairways.

But the semi-private club, built in 1971, isn’t making the cut. Miami-based developer 13th Floor Homes plans to acquire the 140-acre facility and completely transform it into a 350-unit residential community, with single family homes and townhouses. The proposed homes would cost about $300,000 to $400,000 each, meaning the developer stands to make more than $120 million in total sales. The current owner, J&D Golf Properties, would also stand to profit from the sale. It purchased the club in 2002 for $5.3 million.

The Carolina Club conversion is just one of several planned golf course redevelopments in South Florida, as golf operators weigh the rising expense of maintaining fairways and greens against the diminishing revenue. Couple that with the game’s waning popularity nationwide, and owning a golf course is now a risky proposition.

“Less people play golf, and those who do play are playing less rounds,” said Mike Nunziata, president of 13th Floor Homes. “Operators are having to cut rates to attract players. The industry is now in a place where the revenue just isn’t enough to cover the costs to maintain itself.”

His company has developed a niche business statewide for building residential communities on former golf courses. From the 1970s to the 1990s, the game experienced a rise in golf course construction — spiking in Florida — along with some residential communities nestled alongside. Nunziata said that development far exceeded demand.

Despite several closings, Florida still has the highest number of 18-hole golf courses in the country. And just in Miami-Dade, Broward and Palm Beach counties, there are 177 18-hole equivalent golf course facilities, according to the National Golf Foundation. That’s down from 189 in 2007. But many others are barely hanging on, industry pros said.

“The golf courses were purely being built to sell the homes and support neighboring residential communities,” Nunziata said. “It was really more a real estate play and not so much a strategy that was centered around golf.”

In addition to his plans for Carolina Club, the developer is converting an 18-hole course in Delray Beach into Avalon Trails, a 521-unit residential community geared toward people 55 and older. Other projects in the works include a single-family home community over what are now two 18-hole golf courses in Tamarac.

In Hollywood, the Pulte Group is building 645 homes — including townhouses and single-family homes — at the former Hillcrest Golf & Country Club. The area covers 160 acres, and will rise over the 18- and 9-hole courses.

Atlanta-based Pulte is also developing 152 homes on nine of Woodmont Country Club’s 18 holes. It paid $10.2 million for the property in 2016.

But just as Tiger Woods appears to be on the comeback trail, the game itself has been evolving and companies are adapting to the next generation of fans and players.

Topgolf, a Texas-based entertainment and technology-themed firm, has been establishing a presence in major commercial centers around the world, including Miami. At least five Topgolf facilities have either opened or are being planned in Florida. The first opened in Miami Gardens in 2016.

Investors are also considering other uses for all that golf course land. Soccer superstar and entrepreneur David Beckham is considering transforming the Melreese Country Club in Miami into a 25,000-seat Major League Soccer stadium. Beckham and his partners, Marcelo Claure, Jorge and Jose Mas, and Simon Fuller have put the price tag at $200 million.

For Topgolf, facilities are typically three-story entertainment complexes that feature a driving range, restaurant and bar. The golf balls are microchipped so statistics like distance and accuracy can be tracked and translated into points for games.

In some cases, they’re being built on existing courses, as in West Palm Beach. There, a Topgolf facility will rise on the 196-acre West Palm Beach municipal golf course. And while it could be seen as a competitor to 18-hole courses, Topgolf says it works closely with institutions like the Professional Golfers’ Association to help some courses stay open.

Topgolf spokesperson Morgan Schaaf said Florida is a natural place for Topgolf to expand, which the company is doing at a rapid rate. Topgolf is aiming to open seven to 10 locations a year, she said. It’s also going international, with facilities planned for Australia, Canada and Mexico within the next five years. Schaaf added that half its customers are golf novices because the company makes it more accessible than a traditional course.

Despite Topgolf’s popularity, a love for the course is still strong in Florida.

Developer Lennar had been under contract to build homes on the 212-acre Ocean Breeze Golf Club in Boca Raton, which shut down in 2016 after having lost money and members for years. But plans skidded into the rough amid opposition from Boca Teeca duffers who were left with no options.

Sunrise-based GL Homes had already acquired the nearby Boca Raton Municipal Golf Course for $65 million. It plans to replace the 27-hole, 194-acre course with a community of 500 homes.

Earlier this month, the city of Boca Raton and its Greater Boca Raton Beach and Park District bought the 27-hole Ocean Breeze course for $24 million. The seller, Wells Fargo, seized the property through foreclosure. The renovated golf course, to be called the Boca Raton National Golf Club, is set to open in late 2019 or early 2020. It is expected to be a costly endeavor, up to $18 million to renovate and about $2.2 million per year to maintain.

“That kind of community effort appears to be an outlier,” said Brent Baker, Pulte’s Southeast Florida division president. “Only two kinds of golf courses will stay open in the future. The first is the one that requires membership fees, and the second is a public golf course that is subsidized by taxpayers, though even those — as seen with the Boca Raton municipal course — have great difficulty staying afloat. The math usually doesn’t add up. To keep a golf courses operating you’re talking hundreds of thousands of dollars, sometimes millions of dollars a year.”

 

Source: The Real Deal

Fort Lauderdale To Seek Developers For 64-Acre Site Around Stadiums

Fort Lauderdale will offer developers the opportunity to build an entertainment/athletic venue, plus potential commercial development, around Lockhart Stadium and Fort Lauderdale Stadium.

Lockhart Stadium will be part of a request for proposals for a development lease in Fort Lauderdale

On Tuesday evening, the City Commission approved a resolution declaring its intent to lease the 64-acre site at the northwest corner of Commercial Boulevard and Northwest 12th Avenue. It’s on the outskirts of Fort Lauderdale Executive Airport.

City Manager Lee Feldman said his staff is preparing to issue a request for proposals (RFP) for a lease and development agreement on the site within 10 days. The deadline to respond will be July 6.

Feldman said the RFP will call for an entertainment and/or athletic venue with at least four fields that can be used for soccer and lacrosse. At least one of the two stadiums must remain and be renovated, although the other stadium could be removed, Feldman said. No residential development would be allowed on the site, but there could be commercial development that contributes to the entertainment/athletic uses, he said.

Lockhart Stadium has a lease with the Fort Lauderdale Strikers soccer team through Dec. 31. Fort Lauderdale Stadium previously hosted MLB spring training, but has not been frequently used in recent years. The RFP will give the developer the option of demolishing either stadium, but not both. The RFP will also cover vacant land south of Lockhart Stadium.

“The city owns the property and we are looking to have the lease generate income for city and provide for an economic engine,” Feldman said.

The RFP applications must be submitted to Fort Lauderdale’s procurement division. The sealed bids would be reviewed by the city commission on Aug. 22.

 

Source: SFBJ