Real Estate & Construction  December 3, 2010

Foothills Mall looks to future

FORT COLLINS – Just as the Christmas shopping season raises hopes for the retail sector, hopes are rising that Foothills Mall in Fort Collins may be poised for a revival.

Its owner, Chicago-based General Growth Properties Inc., emerged from bankruptcy last month after filing for Chapter 11 protection in April 2009. The second-largest mall owner in America, GGP owns and operates about 185 malls including Foothills Mall, once Northern Colorado’s dominant shopping center.

GGP was able to emerge from bankruptcy after filing a reorganization plan that spun off its real estate development company, Howard Hughes Corp., and by restructuring about $15 billion in debt, recapitalizing with $6.8 billion in new equity investment and paying its creditor claims.

Jim Graham, GGP spokesman, said the recharged company intends to redevelop Foothills Mall, which has suffered from the loss of two of its major tenants – JCPenney and Mervyn’s – and a host of new regional retail competitors over the last several years.

But exactly how quickly that redevelopment will occur is a big question mark at this point, he noted.

“We have not finalized a redevelopment plan, so we do not yet have a timeline set,” Graham said in an e-mailed response to questions. “Market conditions will be among the things that influence timing.”

Graham said redevelopment of the mall has begun.

“We have commenced demolition work on the former JCPenney’s store to better position Foothills Mall for redevelopment,” he said, adding that GGP is working closely with the city of Fort Collins.

“We have worked extensively with the city to formulate a phased redevelopment plan for Foothills that provides the best current opportunity for solidifying Foothills Mall’s position within the Northern Colorado retail trade area,” Graham said.

Study offers ideas

That opportunity will likely be tied to the city’s Midtown Corridor Study, which focuses on economic revitalization possibilities for a swath of retail, office space and housing along the South College Avenue corridor between Prospect Road on the north and Harmony Road on the south.

The study identifies redevelopment of Foothills Mall as a key to the Midtown Corridor’s rebirth. But the study, completed by ELS Architecture and Urban Design, Economic Planning Systems and Warren Wilson Advisors in September, notes that steps must be taken soon to ensure the mall’s continued viability.

“The mall’s condition is precarious and action is required soon,” the study said. “Modest improvements are unlikely to achieve long-term success. The best approach for long-term viability and improvement is through significant redevelopment.”

GGP officials met with city representatives in a tour of the mall on Nov. 16. Josh Birks, Fort Collins economic development advisor, said the tour was “a continuation of a conversation with General Growth” that’s been going on since last summer.

“The tour was to start to talk about what a process would look like in coming to terms with what a redevelopment plan might look like,” Birks said.

Birks said GGP officials were impressed with the Midtown Corridor report and expressed support for a proposed Scenario One, which calls for a gradual, phased redevelopment of the mall through a public-private partnership.

The study also calls for a third major anchor at the mall to join Sears and Macy’s and an additional 300,000 square feet of mall shops to “provide a good program to ensure a successful redevelopment.”

Clearer path ahead

Cynthia Eichler, Foothills Mall manager, said ongoing conversations between the city and General Growth are a positive step.

“The conversations with all of our partners have all been positive and the company coming out of bankruptcy is great,” she said. “The path now is a little more clear.”

Eichler noted that mall demolition work begun in November signals a move in the right direction.

“While there isn’t anything to announce yet, there’s continued conversations and we view the demolition of JCPenney as a step forward for what we want to do,” she said.

Indeed, that action dovetails with the Midtown Corridor study’s recommendations. The study notes that the mall’s two remaining anchors – Sears and Macy’s – own their buildings and have expressed their desire to remain attached to the mall.

“Retention of existing tenants and department stores is the most critical and urgent first step,” the study notes. “To this end, both the city and mall owner should instill confidence among tenants and department stores, communicating the plan to redevelop and by beginning the first steps of redevelopment as soon as possible.”

One possible tool for redevelopment of the mall and the Midtown Corridor is the creation of an urban renewal authority, which would allow developers and property owners to qualify for tax increment financing for a portion of the costs.

The city established a URA for an area along North College Avenue that has resulted in several major improvements, including the ongoing construction of North College Marketplace, a King Soopers-anchored shopping center.

The Fort Collins City Council last month approved funding for an “existing conditions study” of the Midtown area to establish whether it might qualify for a URA. Birks said some kind of public investment will be necessary to help GGP achieve a Foothills Mall redevelopment.

“I think one of the things the Midtown study recognizes is these kinds of redevelopments don’t happen with private dollars alone,” he said. “That’s where the public sector comes in. But at this point, we don’t know what that public participation will look like.”

GGP’s Graham echoes that view. “The specific characteristics of our partnership with the city have yet to be decided, but we welcome a discussion of a range of options,” he said.

FORT COLLINS – Just as the Christmas shopping season raises hopes for the retail sector, hopes are rising that Foothills Mall in Fort Collins may be poised for a revival.

Its owner, Chicago-based General Growth Properties Inc., emerged from bankruptcy last month after filing for Chapter 11 protection in April 2009. The second-largest mall owner in America, GGP owns and operates about 185 malls including Foothills Mall, once Northern Colorado’s dominant shopping center.

GGP was able to emerge from bankruptcy after filing a reorganization plan that spun off its real estate development company, Howard Hughes Corp., and by…

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