A.CRE

Regional Mall

These retail centers are connected by a common walkway, with parking generally surrounding the center’s perimeter. Stores will include tenants with a full range of general merchandise, shopping services, and fashion offerings. Average regional mall sizes are over 500,000 SF, with a general trade area of 5 to 15 miles. Historically, anchors for this subtype have included full-line or junior department stores, mass merchants, discount department stores, and fashion apparel stores. However, this continues to evolve.

Source: ICSC

Putting ‘Regional Mall’ in Context

Case Overview

Empire Retail Partners, a real estate investment firm specializing in core-plus retail acquisitions, has recently acquired the Onondaga Square Mall, a 725,000-square-foot regional mall located in Syracuse, New York. The mall serves as a key retail destination for the greater Syracuse metropolitan area, with a trade area extending 12 miles in every direction.

The acquisition was part of Empire Retail Partners’ strategy to target well-located but underperforming retail assets that offer potential for operational and tenant mix improvements. This investment aligns with the firm’s goal of generating stable cash flow while unlocking value through strategic leasing and amenity enhancements.

Property Details

  • Property Type: Regional Mall
  • Location: Syracuse, New York
  • Square Footage: 725,000 SF
  • Anchors: Two junior department stores, a fashion apparel retailer, and a large-format discount department store
  • Trade Area: 12-mile radius
  • Parking: Surface parking encircling the mall with over 3,000 spaces

How ‘Regional Mall’ Relates to This Case

Onondaga Square Mall embodies the key characteristics of a regional mall. The mall’s 725,000 square feet of leasable space significantly exceeds the 500,000 SF minimum threshold that defines a regional mall. Its mix of tenants includes general merchandise, discount department stores, and fashion-oriented retailers. The two junior department store anchors, along with a large-format discount store, reflect the traditional composition of a regional mall.

Patrons access the mall through multiple entrances, with parking surrounding the perimeter of the site. The common walkways inside the mall allow shoppers to move easily between stores, fostering a unified shopping experience.

Investment Strategy and Value Creation

Empire Retail Partners identified Onondaga Square Mall as a prime candidate for a core-plus acquisition. The property was experiencing slightly below-market occupancy of 87%, with several vacant in-line spaces. The firm’s plan to improve the mall’s cash flow involves leasing up the vacant units, enhancing the tenant mix with experiential tenants (like entertainment centers and fitness concepts), and reconfiguring some of the common areas to create more open, community-oriented spaces.

To illustrate the impact of these changes, consider that if Empire Retail Partners leases 25,000 SF of the vacant space at an average rate of $22 per SF annually, the additional rental income would be calculated as follows:

  • New Annual Rent = 25,000 SF x $22/SF = $550,000

This incremental rental revenue would directly increase the property’s Net Operating Income (NOI). Assuming a market capitalization rate of 7%, the potential increase in property value from this leasing activity can be calculated as:

  • Increase in Property Value = Additional NOI / Cap Rate
  • Increase in Property Value = $550,000 / 0.07 = $7,857,143

This calculation highlights the potential upside available through leasing and tenant optimization at Onondaga Square Mall.

Summary

The Onondaga Square Mall acquisition offers a clear example of how a “regional mall” functions and the investment strategy behind a core-plus acquisition. The property’s size, tenant mix, and design align with the definition of a regional mall, while the investor’s strategy to add value reflects the unique opportunities that exist within this property type. By enhancing occupancy, curating the tenant mix, and activating underutilized areas, Empire Retail Partners seeks to drive cash flow and increase the mall’s long-term valuation.

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