By Michael Hooper
A Topeka commercial real estate professional says he did not bid on West Ridge Mall because he couldn't figure out an angle for the space.
Ken Schmanke, president and CEO at K1 Realty, says he could not figure out anything that would fit in the 411,000 sq ft that was sold on December 15th.
West Ridge Mall sold at auction for $6,025,000.
"This property is in escrow. Once escrow has been closed, the auction details will be made available upon request," according to Ten-X, who handled the auction.
Only 37% of the 411,000 sq ft is occupied at West Ridge Mall.
An income statement in October showed the property had $479,432 in net income for the first 10 months of the year. That would amount to around $575,000 annually.
If there is that kind of income, Schmanke expects the new owner will try to collect that income as long as they can.
Schmanke has worked in commercial real estate in Topeka since 1988. In 2020 he purchased Townsite Plaza and Townsite Tower for about $1.5 million. At the time occupancy in those downtown buildings was below 60%. Now there is about 80% occupancy. The Plaza has 90% occupancy and the Tower 70% occupancy.
"It has exceeded our expectations," Schmanke said.
When asked how he purchased the property, he said, "The stars lined up, the price was right. I looked at it and decided somebody needs to do this and I thought I was a pretty good fit for it."
More than $10 million in total will be invested after all the renovations are completed on the Townsite properties. Schmanke painted the Tower building, which includes a line that looks like modern graffiti art.
Schmanke said that when it comes to old commercial real estate, you have to invest in capital improvements to attract new tenants.
Will the new mall owner take the steps necessary to make it a viable mall? he asked. Will they invest additional money into the property to attract new tenants? Or will they just bleed as much money as they can out of it?
Henry McClure, a commercial real estate broker with MCRE LLC, said West Ridge Mall was always overbuilt from the very beginning.
The mall was constructed in 1988 by Simon Property Group, but Simon sold the mall in 2014. By that time, the mall had declined substantially and many tenants left. Washington Prime was the new owner but eventually that group went bankrupt and West Ridge ended up in the hands of Wells Fargo Bank.
There are many possibilities for the future of West Ridge Mall.
McClure said the best buyer is the end user, somebody who will actually use the space. One of the challenges with the mall is all the separate ownership of various tracts of land. Sears, Dillard's and JCPenny and Furniture Mall of Kansas all own their own land and buildings. The total mall area is about 1 million square feet.
McClure said that it's possible for the new owner to work with the existing owners through a reciprocal easement agreement, a treaty between the owners.
Amazon has been purchasing malls and converting them into online distribution centers. That is a possibility for West Ridge, but McClure says there's probably a higher and greater use for it.
He said the entire campus could be converted into a senior center with medical facilities and housing but he doesn't see retail space growing at the mall.
Shopping habits have changed. People buy online. People drive up to a store and go through the front entrance and leave that way.
Other options for the property is a convention center, entertainment center, with hotel and gaming areas. Or perhaps a medical campus with a new hospital, plus offices and leisure.
Certain malls are recycled and others are scrapped all together, McClure said. Some commercial space is easy to convert. McClure said he is working on renovating the former Gordmans store into a light industrial space on South Topeka Boulevard.
A search on the internet for mall redevelopment will bring up all kinds of stories about malls. The Landmark Mall in Alexandria, Va., is going to be torn down to make room for a new hospital and other development.
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