Colorado Real Estate Journal - May 7, 2014
When Jordon Perlmutter opened Southwest Plaza in 1983, it was the biggest and flashiest mall the Denver area had ever seen. Perlmutter, who developed the mall with Samuel Primack and Michael Cooper, sold it to Chicago-based General Growth Properties Inc. in 1998 for about $113 million. Southwest Plaza has 1.39 million gross leasable square feet, according to GGP documents. Now, GGP, which has more than a $20 billion market cap after successfully emerging from bankruptcy following the Great Recession, is embarking on a massive renovation and redevelopment that will rebrand Southwest Plaza and bring new tenants. “It is safe to say it will be the biggest investment in the mall, except for perhaps when it opened,” said Greg Sims, general manager of the mall at 8501 W. Bowles Ave. in Jefferson County, just west of Littleton. “We are super excited about it as a local team,” Sims said. “We are basically taking a very tired, old mall and transforming it into a very open, modern-day shopping center that will bring it up to date with lots of glass and open areas,” he said. “The food court, for example, which has always been kind of hidden, is now going to open up and we’re actually going to take advantage of the mountain views for the first time,” Sims continued. “We are going to have outdoor patio seating available. We’re going to bring the outdoors in and the indoors out, if you will.” The new indoor-outdoor dining area will be called Mountain Terrace. He said the construction began March 1, but wasn’t unveiled until April. “A few things had to fall into place and we could finally unveil what was going on behind the curtain,” Sims said. Neither has GGP revealed the exact amount it plans to spend on the renovation, other than to say it will be in the multimillions of dollars. “It is going to be a very significant investment,” Sims said. In a Feb. 21 Securities and Exchange Commission filing, however, GGP said it already had spent $1.2 million on the redevelopment and it projects it will receive a 9 percent to 10 percent return on the investment. The final tab is surely to be much higher. “I could not say what they would pay for a redevelopment of the 1.3 million square feet (mall),” said John Winslow, principal of Winslow Property Consultants LLC. “If they spent $50 per square foot, that would be $65 million,” Winslow continued. Although GGP is not planning to tear down the entire mall like developers did at Tamarac Square, Cinderella City, Southglenn, Villa Italia and Westminster, “the cost would be three times that,” or $150 per sf, Winslow estimated. In addition to the redevelopment cost, neither Sims nor GGP will reveal the names of new tenants coming to the mall at this time. However, CREJ obtained a copy of a site plan prepared in January by GGP that shows existing and new stores in reconfigured space at Southwest Plaza. Some of the tenants on the plan included: • A 24,550-sf H&M, • An approximately 10,000-sf Cheesecake Factory next to the existing Sears anchor, • A 6,231-sf Champs Sports, • A 7,387-sf Tilly’s, • A 4,761-sf Katie Mullins, • A 4,532-sf C.B. Potts, • A 3,400-sf Mod Market; and • A 1,014-sf Chipotle Mexican Grill. “I can’t talk about any specific tenants at this time, but I will say in general we will be getting the type of high-quality retailers that you mentioned,” Sims said. “Going forward, we will be announcing new tenants in the future,” he added. The mall’s five anchors — Dillard’s, JC Penney, Macy’s, Sears and Dick’s Sporting Goods — will remain open during the construction, scheduled to be completed in fall 2015. “The construction will take about 18 months to complete,” Sims said. He said some of the more dramatic changes will be the entrances, which will be much more inviting with the use of a lot of stone and glass. GGP also will be adding Wi-Fi, electronic charging stations and “loungelike” seating areas, he said. Studio H2G, based in Birmingham, Mich., is the design architect and the architect of record is Dallas-based Omniplan. WhitingTurner Contracting Co. of Greenwood Village is the general contractor. GGP filed for Chapter 11 bankruptcy reorganization April 16, 2009, during the Great Recession. It emerged from bankruptcy in 2010 and Toronto-based Brookfield Management Inc. took an equity position in it. Brookfield now owns about a third of GGP, which has a market cap of about $20.8 billion. “Our parent company is now stronger than ever,” Sims said. “The Great Recession was such an interesting time for the retail centers as well as companies like General Growth Properties,” Sims said. However, he said while Southwest Plaza, like all malls, was impacted, he thinks the shopping center held its own even during the Great Recession, given its strong demographics. GGP said Southwest Plaza is at “Main & Main,” in the southwestern metro area, as it can take residents of the area 45 minutes to reach Cherry Creek and 30 minutes to drive to Park Meadows (which also is owned by GGP). In addition, an average of more than 160,000 vehicles drive past Southwest Plaza daily. We believe Almost a half-million people live within its service area and the average annual household income in the area is $85,962. “This is not a case if you improve it, the shoppers will come,” Sims said. “Shoppers already are coming here and this will just make it a better experience for them,” he said. “I think along with Cherry Creek and Park Meadows, Southwest Plaza is one of the three top malls in the area,” Sims said. And with the redevelopment and new tenants, shopping at Southwest Plaza will be an even better experience for consumers, he said, assuring its position as a top mall in the metro area