Eastland Mall Redevelopment

[dubone]

Does that kind of press affect office locations? Uptown had offices for the decades when it was considered extremely dangerous.

[mallguy]

One factor in office locations is location vis-a-vis employee (particularly high-ranking employee) housing. Thus I don't see any high-end offices ending up where Eastland is, since CEOs who live in SouthPark and Myers Park aren't close by. If a company neads cheap office space for back-office jobs, or if offices for neighborhood activities or government jobs are needed, then I see them heading to the Eastland site.

[dubone]

But East Charlotte isn't yet a "bad" place for employees. It is just borderline, just as University City is borderline. University City has a tremendous amount of office.

Something is needed to turn the area around. It seems to me that a major component that is missing from that whole section of Charlotte is office facilities.

[monsoon]

Does that kind of press affect office locations? Uptown had offices for the decades when it was considered extremely dangerous.

I don't think the CBD was ever really considered extremely dangerous, especially during business hours. I worked in downtown in 1979 and never felt the fear of crime there. The central jail and police stations were located there in the sea of parking lots so there really wasn't much crime. Downtown simply died, like an office park outside of business hours. There wasn't much crime, unless you count the whores on Trade street, simply because there were not that many people in downtown.

Given the recent criminal activity in downtown, it could be argued that crime is in fact higher now than it was in the 80s and 90s.

[mallguy]

I certainly wouldn't take a job in an office building where Eastland Mall is. Only Class B or C office space would locate there- perhaps some neighborhood-type space (dentists, doctors, divorce lawyers) would go there, but I don't see anybody in SouthPark itching to go work there. Nor do I see many white-collar employers in Charlotte jumping to go locate there, either. The whole area just has a bad rap.

[SmellyCat]

Assuming Eastland continues its current downward trajectory ultimately into the ground, what will become of the section of the trolley line that is supposed to run out to that area?

[monsoon]

It will no doubt be built. The political ramifications of not building it are too high.

[mallguy]

Groundbreaking on the transit center at Eastland will happen pretty soon. Wondering if that could help revive the mall. Probably not, as the stores inside the mall wouldn't necessarily be right in front of where people congregate to catch their buses, but in a typical urban area, it might help, and Eastland still seems to attract pretty heavy traffic yet is still dying- just not people who spend a lot of money at the mall, for whatever reason.

[MZT]

East side does have office space off Albemarle road. The Social Security offices and IRS are out there. And there's a smattering of medical and real estate offices.

But we're just not gonna see any "Fortune Mag" type development. What new construction there is, seems to be headed toward University.

[peaceloveunderstanding]

I certainly wouldn't take a job in an office building where Eastland Mall is. Only Class B or C office space would locate there- perhaps some neighborhood-type space (dentists, doctors, divorce lawyers) would go there, but I don't see anybody in SouthPark itching to go work there. Nor do I see many white-collar employers in Charlotte jumping to go locate there, either. The whole area just has a bad rap.

According to the Chamber the major tenants in that area are Hartford, AAA Carolinas, GAB Robins, and Zenith.

The Vacancy rates on the East Side are among the highest in Charlotte, I don't forsee many new offices going over there.

More Information about office markets in Charlotte can be found here:

http://www.charlottechamber.com/files/officesurvey.pdf

[monsoon]

One of the problems with that part of Charlotte is that it is fairly difficult to get to from just about anywhere else in Charlotte.

[StevenRocks]

When the trolley gets put in, naysayers will have to come up with a new excuse for abandoning the area, I guess.

[dubone]

Although I agree with the assessment that most of East Charlotte is hard to access from the rest of the city, I think Eastland is not one of those places. With Independence and Albemarle being upgraded, and with Central getting major transit, I think Eastland might be the perfect place for office employment for the East side.

Tranportation in much of the rest of east Charlotte is just such a mess it is hard to know where to start to fix it.

[SmellyCat]

Glimcher had its 4Q05 earnings call today. Sadly, not much news on Eastland, other than a reaffirmation that the property was still up for sale. It appears interest in the mall is tepid, at best.

[StevenRocks]

Somebody will buy it, they just want to buy it at a fire-sale price

Edited February 23, 2006 by StevenRocks

[mallguy]

Somebody will buy it, they just want to buy it at a fire-sale price

I agree- and after the heat Simon Properties got due to simply giving up Biltmore Square Mall in Asheville (which damaged Simon's credibility in capital markets), Glimcher might hang on for a somewhat decent price. Hopefully they'll sell it before the Dillard's closes!

[SmellyCat]

I agree- and after the heat Simon Properties got due to simply giving up Biltmore Square Mall in Asheville (which damaged Simon's credibility in capital markets), Glimcher might hang on for a somewhat decent price. Hopefully they'll sell it before the Dillard's closes!

Simon throwing back the keys on Biltmore Square was no surprise - how long is an owner supposed to milk a 25% occupied mall in a saturated market? Although admittedly it certainly wasn't a good event for capital markets, I doubt any major lending institution or the public bond market is going to turn the largest mall company in America away if it came asking for money.

Glimcher is relatively small cap company with a junk debt rating that operates in B/C malls and redevelopment projects, which, by association, puts them near the bottom of the public real estate company food chain. Therefore, they don't have a reputation to lose here, because there wasn't really one to begin with. I don't believe they have a mortgage on this mall, so at least there is no danger of them walking away from it and leaving it to the bankruptcy court to dispose of. However, I do believe they will soon realize that in the face of a steeply eroding asset, today's firesale prices might look awful good in a few months time. In the meantime, Eastland just sits there fermenting while we wait for something to happen.

[StevenRocks]

I'm with SmellyCat on this. Simon walking away from Blitmore Square isn't earth-shaking. Companies with dying malls do it all the time. It's kind of crappy from a public relations standpoint, but operating a dead mall is too.

My prediction: Eastland will sell for less than $10 million within the next year.

Edited February 24, 2006 by StevenRocks

[mallguy]

When Simon walked away from Biltmore Sq. I agree that wasn't earth-shaking, but there were a bunch of articles in industry trade publications about it because the situation wasn't routine; Simon took a lot of heat for that as perhaps some of the mortgage terms were violated or something.

I'd figure that Eastland's value will decline much more after the Dillard's closes so I'd assume Glimcher would want to sell as soon as it can get a reasonable price.

[StevenRocks]

The important thing in marketing this property is to keep the ice rink open. That space downstairs would be nearly impossible to convert to something else if it closes.

Edited February 24, 2006 by StevenRocks

[mallguy]

I'd guess that the price of a mall is determined mainly just by the cash flow from it, but I was at Eastland today and the mall looks really ratty outside. Even if Glimcher would just give it a good paint job, it would help its curb appeal.

BTW that flea market opening in the former Hannaford grocery store next door to the mall will not help things.

[StevenRocks]

I don't think the Hannaford flea market is part of Eastland's property. There's not a lot they can do about their neighbors.

Eastland does look ratty outside. I don't think it's been updated in years.

[mallguy]

I don't think the Hannaford flea market is part of Eastland's property. There's not a lot they can do about their neighbors.

True- I can only picture the faces of the executives of a potential buyer as they land at the airport, drive through Charlotte and drive to the mall and see the flea market next to it-- not good!

[StevenRocks]

True- I can only picture the faces of the executives of a potential buyer as they land at the airport, drive through Charlotte and drive to the mall and see the flea market next to it-- not good!

You have to consider that this is the mall with Fred's in it though. They may not be looking for anything terribly upmarket.

[mediamongrel]

It does make sense, but I'm not sure if any offices would want to locate in that neighborhood. The press has done a bang-up job of convincing people the area is unsafe.

I dont know if it is all the press...ask the average person to walk from Eastland Mall to Albemarle Rd. at dusk.