Mall sale has closed, executives say

 

Note: This story was last updated at 10:30 p.m.

The sale of the former Oak Ridge Mall has closed, executives said Friday morning.

The sale was confirmed by Steve Arnsdorff, chief manager of Oak Ridge City Center LLC, which had owned the property, and Neil Wilson, principal of RealtyLink, the new developer.

The new owner is TN Oak Ridge Rutgers LLC, a company set up by RealtyLink, which is based in Greenville, South Carolina. The purchase price was $6.3 million, and the sale closed late Thursday evening, Wilson said.

RealtyLink plans to redevelop the roughly 58-acre site, which includes a Belk and JCPenney, as a mixed-use development known as Main Street Oak Ridge. It could include retailers, restaurants, residential units, and possibly a hotel.

“We’re excited for what this project will do for Oak Ridge,” Arnsdorff said. “This community deserves this. We’re excited this is happening.”

“I think what I would like to point out is that it’s a great day for Oak Ridge and for the city to sort of embrace this new mall,” Wilson said.

Officials have said that Belk and JCPenney, the two anchor stores remaining at the mall, are renewing their leases. The new stores that have been announced are Dick’s Sporting Goods, Electronic Express, Maurice’s, PetSmart, Rack Room, Rue 21, T.J. Maxx, and Ulta.

Demolition of the enclosed space between Belk and JCPenney could start the week of July 18. A demolition crew will be at the site on Tuesday, but they may not be noticed right away because they might be inside. Workers have to first shut down the utilities that serve the old mall, Wilson said, and that could take a few days.

Construction of new stores expected to open in the spring of 2017 could start near Belk in October. It’s part of the $46 million first all-retail phase of the project.

The first four stores to be built, adjacent to Belk, are Maurice’s, Rack Room, Rue 21, and Ulta, Wilson said.

Construction on Dick’s Sporting Goods and T.J. Maxx, which will be adjacent to Walmart, will start soon after that.

RealtyLink also has leases with Electronic Express and Petsmart. Those stores will be located on the JCPenney side of the property.

“It’s obviously great to the city in terms of us being able to go forward with a sense of momentum,” Oak Ridge Mayor Warren Gooch said. “It’s a game-changer for the city. We eliminate that black hole in the center of the city. I could not be happier.”

Oak Ridge retail consultant Ray Evans said the city staff will meet with the RealtyLink project manager and contractors and subcontractors on Tuesday to start going over demolition and construction on the complicated project, hoping to make sure everyone is “on the right foot.”

The second phase of the project, which is expected to cost about $75 million total, could include restaurants and residential units and maybe service companies like insurance agencies and dry cleaners.

Wilson said RealtyLink has a contract with a Marriott-brand hotel and is selling them land. The hotel could open sometime next year, he said.

Gooch said the project will change the image of the city center and provide a tremendous amount of sales tax revenues and hundreds of jobs.

“It sends the signal that Oak Ridge is moving ahead,” Gooch said. “It sends the signal that we’re not standing on the sidelines.”

Arnsdorff, a Chattanooga businessman, said one of the big commercial objectives for Oak Ridge was to create a more vibrant shopping area.

“It’s absolutely needed,” he said. “We’re real excited that RealtyLink is going to make that happen.”

Wilson gave credit to city officials.

“It would not have happened without their participation,” he said.

Arnsdorff also praised Oak Ridge leaders.

“They have done an amazingly spectacular job of helping to turn around their community by being proactive,” Arnsdorff said.

The sale of the mall has been eagerly anticipated for months, even years, by both residents and officials. Oak Ridge officials have said the project, if it happened, would greatly improve the mood of the city, while a failure to proceed would be a major disappointment for the community.

The sale of the mall has been in the works for more than four years. Crosland Southeast, a North Carolina developer that worked on the project before RealtyLink took over in September, spent more than two years and $1 million working on the redevelopment.

The state of the mostly empty mall, right in the center of Oak Ridge, has been a concern for more than a decade, including because of its perceived contribution to a drop in the quality of life and the loss of potential sales tax revenues. Some have said the mall was overbuilt when it was constructed several decades ago, and the enclosed mall was the wrong kind of development for a community the size of Oak Ridge.

In the community, several factors have been blamed for the decline of the mall before Arnsdorff and his partners took over in the early 2000s. Many have often said that tenants left because of increasing rents under a previous owner and developer, although it’s not clear how many tenants that might have affected, and at least one former city official said U.S. Department of Energy layoffs in the mid-1990s hurt the mall. In any case, officials have said retail shopping areas have moved away from enclosed malls to open-air centers.

The mall property has depreciated significantly—officials have said its assessment has dropped by about as much as 90 percent—and the lack of redevelopment or a vibrant shopping area there has been one of the chief concerns of many, including existing companies, business prospects, retailers, restaurants, retail and residential developers, and residents and potential residents.

The question has been, essentially: “What’s going on with Main Street?” Oak Ridge Chamber of Commerce President Parker Hardy said. “When you have a distressed property right there in the center of your city, it causes stress throughout the community,” Hardy said. The bigger the distressed property, the bigger the stress on the community, he said.

But the inverse of that is: When you have a success in the center of town, that has the inverse effect of failure. A success in the middle of town has a positive impact, Hardy said.

“This is an economic shot in the arm,” Hardy said of the Main Street Oak Ridge closing. “It is a psychological shot in the arm.”

 

Hardy has said there are other shopping center developers interested in coming to Oak Ridge, but some have been waiting to see what happens at Main Street Oak Ridge.

Officials said Main Street Oak Ridge could keep people eating and shopping in Oak Ridge on weekends and at night, rather than driving to Turkey Creek in west Knox County, and help improve housing, offering a community with more modern conveniences. It’s also expected to be good for other shopping centers old and new, officials said.

Arnsdorff and his partners bought the mall for $6 million in 2003. That purchase came after a 2002 vote in which 56 percent of Oak Ridge voters rejected a $23.2 million bond resolution that would have supported a plan to convert the mall into a town square that would have included new school administration headquarters and a senior citizens center.

There have been several redevelopment proposals since then, and they’ve sought to replace the mall with a mixed-use open-air town center, with much of the enclosed mall space being demolished. But none of those plans translated into actual development, leading to some continuing skepticism in the community. Still, the news of Thursday’s closing has clearly given new hope, joy, and certainty to many people.

Like the earlier plans, RealtyLink’s plan also calls for a mixed-use redevelopment and the demolition of the enclosed space between Belk and JCPenney, although those two stores would remain.

Arnsdorff and his partners retain the ORCC Staples property and a 2.2-acre vacant piece of land at the corner of Wilson and East Main Street, where the old DPI building and old bowling alley used to be.

Arnsdorff said it was critical that the city get involved.

“This is the best thing that has happened to the city from a commercial shopping standpoint,” he said. “This piece is really important to give a vibrancy to the city.”

 

Among the local initiatives to help the Main Street Oak Ridge project have been a $13 million tax increment financing, or TIF, package from three banks, led by Pinnacle Bank and including TnBank and First National Bank of Tennessee. The TIF will help cover development costs using new property tax revenues generated at the mall site and 120 surrounding acres included in a TIF area to repay the TIF loans. Six local employers have pledged roughly $500,000 to help cover public infrastructure costs. Also, the Oak Ridge Industrial Development Board has approved a $500,000 infrastructure grant, while the Oak Ridge City Council has authorized $2 million in roadway and other infrastructure work, with $1 million of that coming from city funds.

In a June 13 meeting with Oak Ridge City Council, Wilson said RealtyLink had invested $400,000 in Main Street Oak Ridge so far.

During that meeting, the City Council agreed to allow the city manager to negotiate with federal officials and RealtyLink for the transfer of the 17.12-acre American Museum of Science and Energy property—if the federal government wants to get rid of it. RealtyLink is concerned that any potential development of the AMSE site that competes with its project would hurt Main Street Oak Ridge. AMSE is across South Tulane Avenue from Main Street Oak Ridge, and other developers have previously considered building on part of the property.

See a story on demolition plans here.

See a story on the four new stores announced at Main Street Oak Ridge here.

See previous Main Street Oak Ridge stories here.

See previous Oak Ridge Mall stories here.

More information will be added as it becomes available.

 

 

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