by David Smith
Posted 3/13/1995 12:00 am
Updated 2 years ago
That is in sharp contrast to the history of the 95-acre tract at the southwest corner of Interstate 430 and Shackleford Road. Jim Wilson & Associates of Montgomery, Ala., bought the property for $11 million in January 1988 with plans to build a mall known as The Summit at Little Rock, but the project never materialized.
Late last month, Summit Mall Co., an affiliate of Simon Property Group formed specifically for this purchase, bought the land from Gergins Investment Corp., an affiliate of Manufacturers Hanover Trust & Co. Manufacturers Hanover, which had an $18 million mortgage on the land, took it over in 1991 after Wilson declared bankruptcy.
Wilson had the property zoned for a two-story mall with four anchor tenants; a 250-room, 10-story hotel; three six-story office buildings; and two restaurants. That zoning still is in effect, and Simon would have to petition the Little Rock Planning Commission if any significant changes are made.
Indianapolis-based Simon, one of the country's largest shopping center developers, owns McCain Mall in North Little Rock and University Mall in Little Rock. If the new mall in west Little Rock is built to current zoning plans, it would be the state's second largest, behind 1 million-SF Central Mall in Fort Smith.
No one at Simon returned telephone calls to discuss plans for the property or to answer some intriguing questions:
o Will Dillard Department Stores Inc. be among the mall's anchor tenants?
o If Dillard's anchors the new mall, would it maintain its stores at Park Plaza?
o Who would be the mall's other anchor stores?
o What would happen to University Mall, which is only about five miles from the proposed mall?
o When will construction begin?
No one at Dillard's returned calls concerning the proposed mall, and no Little Rock source was able to predict with total confidence how the project would be developed. From discussions with real estate and retail sources, however, several possible scenarios emerged.
"It will all be driven by the anchor activity and how anxious the anchors are to place a store there," one source says.
'98 Construction Start
All agreed that for any new mall in Little Rock to be successful, Dillard's must be an anchor tenant. That certainly would decrease the volume at Dillard's Park Plaza stores, but Dillard's operating agreement at Park Plaza requires it to keep those two stores open.
Mall construction probably would not begin until 1998, with an opening in 1999 or 2000. It would take about 18 months to build the mall at a cost of as much as $80 million.
One source says local speculation suggests that Dillard's entered into an agreement with Simon Property Group in the land purchase. The possible agreement would require Simon to limit the mall's anchor tenants to department stores already in the central Arkansas market.
"So they could put in a J.C. Penney, a Sears or a Montgomery Ward," the source says, "but [Simon Property Group] couldn't put in a Parisian or a Nordstrom's or anything like that. That's kind of the rumor behind it."
When the mall opens, "it would surely cripple University Mall," the source says. "Whether it is fatal or just reduces the rent, I don't know. It was my understanding that Melvin Simon was kind of reluctant to go through with this, but got pushed into this by Dillard's.
"Dillard's is such a powerful anchor, if you are a mall developer or a shopping center developer, you have to listen to them. Dillard's may have wanted to lock up a site in west Little Rock, a wonderful market for them. But they really don't want to go buy it. So they get with Melvin Simon and say, 'Listen, we do a lot of deals with you and we'd appreciate it if you would go in and buy this site.' This is very much speculation. We don't know these things for sure."
Tom Hoskins, president of Dunlap Co. in Fort Worth, Texas, which owns the three M.M. Cohn stores in Arkansas, says his firm has talked with Simon Property about locating in the mall.
"We've had some conversation about the mall, but we really haven't decided what to do there," says Hoskins, who says Dunlap has six or eight stores in Simon Property Group centers. "We'll just see what happens. There has been no commitment made to go in there."
Hoskins says Dunlap is very pleased with M.M.Cohn's performance in University Mall. He says that in other markets Dunlap has two stores as close as University Mall and the new Simon Property mall would be.
"We haven't decided to do that, but it is not out of the question," Hoskins says.
New mall construction is an area dominated nationally by Simon Property Group, the publicly traded company formed from Melvin Simon & Associates Inc. two years ago. After a nine-year decline, the construction of new shopping centers finally increased in 1994, according to a January report by the International Council of Shopping Centers. The growth was centered in regional malls and community shopping centers, the categories where Simon Property Group concentrates its business.
Of the six super-regional malls with construction beginning in 1993 or 1994, three are owned by Simon Property Group.
Simon plans to open the three malls, each larger than 800,000 SF, later this year, says Gregory Whyte, an analyst with Dean Witter Reynolds Inc. The malls, with a total of 3 million SF of space, are in Indianapolis; Austin, Texas; and Florida. The firm also will begin construction on a fourth mall, Cottonwood Mall in Albuquerque, N.M., in the next few weeks.
"They are one of the most highly thought of mall developers in the country," says Mark Benson, an analyst with the investment firm Kemper Corp. "They are very well-respected in the industry.
"They have been involved with William Dillard [founder and chairman of Dillard Department Stores] for a long time. It goes back to Melvin Simon, who's been in the business for more than 30 years."
Benson says Dillard's is the third-largest tenant in Simon shopping centers, with 4 million SF. J.C. Penney Co. is Simon's largest tenant with 6 million SF, followed by Sears Roebuck & Co. with 4.2 million SF. Montgomery Ward has 3.2 million SF in Simon properties.
Simon has 119 malls and shopping centers with 58 million SF of leasable space in 29 states. Its tenants include 1,800 retailers in 5,600 stores.
Another Potential Project
Another giant office or retail project could be built about two miles south of the Simon Property Group site.
Three Little Rock real estate developers - Ramsay Ball, Jim Moses and Jim Nosari - have a long-term option on 100 acres at the southwest corner of Colonel Glenn Road and Interstate 430.
The three, under the name Bimini LLC, took the option on the land owned by St. Vincent Infirmary Medical Center. Also included in Bimini is Eddie Rogers, an Alabama developer who was involved in the new Wal-Mart Stores Inc. development on Bowman Road.
"We've talked to everyone from mall developers to power center developers to some outlet mall developers, different types of retailing," Ball says. "We've looked at office development, we've looked at some very non-traditional development on that corner. So we aren't necessarily tied to a retail mall being in that spot." n