The owners of Southgate Mall unveiled their vision for the shopping center and its surrounding properties Wednesday, one that promises to create an urban-style district complete with housing, entertainment and more dining opportunities.
At a special meeting called by the Missoula Redevelopment Agency, a representative of Southgate Mall Associates said the ownership plans to begin a 70,000-square-foot addition before next spring, and launch other improvements at a cost of roughly $50 million.
The initial project would include utility work and the makings of a new street grid in what now serves as the parking lot. The work would lay the foundation for what's envisioned as an urban neighborhood situated around a town center with a host of new attractions.
“We’ve got some very good chances of some of these pieces falling into place – pieces we’d call services, and that ranges from grocery to entertainment,” said Peter Lambros, a representative of Southgate Mall Associates. “But a lot of it depends on the outcome of what we’re asking for today.”
To make the vision a reality, the mall is asking to be incorporated into Urban Renewal District III, making it eligible for tax increment financing; a method of funding that supported the redevelopment of the old Kmart site at South Crossing and helped transform the blighted downtown district in the 1980s.
MRA is expected to lobby for the district’s extension before the Missoula City Council within the next two weeks. All but one member of the council has voiced support for renewing the district.
The holdout – Ward 2 Council member Adam Hertz – believes the district has already achieved its goal and should be permitted to expire.
“I took issue with that,” said Ellen Buchanan, director of MRA. “We haven’t even scratched the surface of what’s possible at this point. We’re just beginning to see projects like South Crossing, the Brooks Street improvements and Southgate Mall.”
The mall remains a relic of 1970s urban design, one that has since fallen out of fashion. To remain relevant in today’s retail world, Lambros said, the mall must read the tea leaves and get ahead of the curve.
Other shopping centers have died because they failed to react to retail trends. Those at Wednesday’s meeting agreed that an empty mall would pose a bigger challenge to the city than shifting the boundaries of District III, or freeing up tax increment funds to help build a street grid that will accommodate millions of dollars in new development.
“We can build a grid system that’s gone away by virtue of a large doughnut hole and a monolith (the mall), and we’ve got a partner who’s willing to do it,” said Mayor John Engen. “In 10 years of doing this work, I’ve not seen anything like the interest from retailers and commercial folks like I’ve had in the last two years. There’s some real opportunity here.”
Southgate Mall Associates has quietly purchased several properties around the mall to accommodate its vision, including the old Val-U Inn, Curley’s Broiler and Paxson Plaza.
What’s more, Lambros said, work to turn the mall “outward” has already begun with renovations taking place at Red Robin, which plans an outdoor patio, and the construction of the H&M store – considered an all-star tenant in any retail development.
The mall also purchased Sears, which plans to close in June. Construction will retrofit the store for new tenants and include an outward focus – a style of building with outdoor access and visibility.
A new addition would also take place on the mall’s southern edge and include an “entertainment” venue. The first two phases carry a value of nearly $55 million.
“To put ourselves on firm footing for the next several decades, the mall would need to go through a few critical transformations,” said Lambros. “It would need to become more service-oriented. That means entertainment and, above all, food, groceries, specialty groceries and restaurants – all the reasons people go somewhere on a daily bases.”
Lambros said the economy has created a unique window of opportunity to start the project now. Interest rates remain at historic lows, consumer confidence is high and retailers are looking for new opportunities.
“We know some all-star tenants are going to be a part of this development,” Lambros said. “While I can’t talk about some of the conversations that are going on because of the confidentiality that comes with the leases, I can tell you we have wind in our sail with prospects.”
Jeremy Keene of WGM Group said the street grid is a fundamental piece to building a pedestrian-friendly urban development.
While the mall looks to grow and shift outward, other projects would follow, including additional retail, dining and housing built to an urban standard.
“The mall is a 'superblock' – you’re driving through a parking lot,” said Keene. “That would be broken up into smaller blocks, creating a more traditional urban pattern with streets. We feel that will inspire the next decade of urban development in the neighborhood around the shopping center and transform the area into a retail and service destination.”
Work is expected to begin this fall, though that may be contingent upon the mall’s acceptance into District III, and whether the City Council votes to extend the district’s life.
Lambros said the mall may also change its name as it rebrands itself to reflect its new vision.
“We have some unique opportunities and our moment is now,” said Lambros. “We hope the city will see the value of this. If we invest in the infrastructure and do this right and really look at the long-term neighborhood connectivity, the seeds we can plant today will have a far-reaching benefit.”