This project is an example of a project that has managed to pull itself out of failure at the last moment. Low occupancy has plagued the mall (a very large open air construction, with green space and an interesting fountain out front of the leasing office) with lower cash flow than would have been expected at the outset.
This retail project was built in an area that had a population too small to support it's size. There are 100 000 people in the capture area where traditionally there would be 150K needed to support a project of this size. However, the demographic in the area typically has a higher net worth than demographics of other areas. This fact spurred the developer to risk doing the project.
The recession presented a real challenge to the project with occupancy still recovering to a more stable level. Some of the stores have rent concessions, which will remain in effect until the occupancy of the center increases to above 70%. For instance, the Barnes and Noble franchise is currently listed as the 4th best of it's peers in the surrounding area, but does not have to pay a percentage of it's sales to the galleria as per the lease agreement.
This open air mall does not have a typical anchor store at the moment, which the developer feels will be key to creating better traffic flow into the project. They are seeking an "organic" grocery store such as Whole Foods or Central Market at the moment too meet this demand.
The project is funded mostly by high net worth individuals who are sitting tight in the hopes of seeing a return. This does not seem too far off as the occupancy is approaching the 70% barrier, above which the mall will earn far more. The smaller retailers are experiencing slow sales at the moment, but are also surviving.
Their typical lease times are 5 years with a 3,4 or 5 year extension option after the initial period.
After the visit, I expect that the worst is behind this project.
Nighttime at the Mall
Some of the shops
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