In our spring paper issue, we featured a story about how Regency Square Mall went from one of America’s most profitable malls to being little more than a shell of its former self.
The piece ended on a somewhat optimistic note, explaining that new tenant International Décor Outlet would be taking over half of the dilapidated mall building to create a home décor outlet mall as well as an Asian community center.
While the idea was intriguing, IDO flopped pretty much immediately upon launch, opening only a few storefronts in comparison to the expectation of up to 90 stores.
In July, IDO filed a lawsuit against the owners of the mall, claiming that the property is in too bad of shape for more storefronts to be completed. IDO is also dealing with an ongoing lawsuit filed by Chinese manufacturers alleging that the company took money to build storefronts that never came to fruition.
Meanwhile, the small portion of the mall that remains open continues to decline. Roof leaks and well-worn storefronts provide what will likely be key evidence in IDO’s pending lawsuit, as the mall’s ownership seems to have given up on maintaining the property.
As a result, what was once one of Jax’s biggest malls now sits as one of its biggest wastes of space. As the area surrounding Regency begins to slowly revive itself, the lack of progress in fixing the mall itself becomes a bigger and more noticeable burden.
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There’s no easy solution here, as it’s becoming clearer that the property in its current form is likely not suitable for anything less than total redevelopment. In other words, there will never be a true revival of Regency Square Mall – but that doesn’t mean the entire property is hopeless.
Here’s what we think needs to happen in order to get the Regency Square Mall property back on track.
STEP #1: SELL IT OFF
The first thing that likely needs to happen, for the benefit of both the property and the community at-large, is a change in ownership.
The property was purchased in 2014 by a shell company created by New York-based companies Mason Asset Management and Namdar Realty Group – both known for investing in failing malls.
The purchase included everything except a former Sears anchor store and the Dillard’s outlet center, both of which are owned by their respective parent companies. Impact Church has since bought the former Belk location at the mall as well.
In the three years under this new ownership group, the mall has continued to deteriorate. Pretty much every plan to revive the mall during this time period has failed, from IDO, to a planned auto museum that never opened, and beyond.
It would be unfair to place all of the blame on this ownership group. After all, they inherited an already-crumbling property that was sold off for well below market value. Its previous owner, General Growth Properties, deserves most of the blame for the property’s rapid decline after it took over in the early ‘90s.
That being said, nothing this new group has done is working, and it seems like Regency has perhaps taken a backseat to the rest of their portfolio.
A new, more locally-based owner, who is both able and willing to take an initial loss as a trade-off for long-term success, might be able to focus more closely on solving the property’s ongoing problems rather than letting them fester.
STEP #2: TEAR IT DOWN
Tearing down and redeveloping the Regency property has been proposed for years, but it’s never looked more practical than it does now.
One obvious argument for demolition is the current conditions of the existing structure. To make the property viable for tenants, major work would need to be done. It would probably cost a similar amount to just tear it all down and start over, and doing so would definitely allow for more flexibility in what the space could be used for.
Tearing down the old mall structure would also allow developers to work around the properties that are owned by other companies. For example, an open-air center could be easily built around the remaining structures such as Dillard’s, AMC, and Impact Church – whereas trying to rebuild the mall while still incorporating those structures would take longer and require much more back-and-forth discussion.
STEP #3: LISTEN TO THE COMMUNITY
So let’s say a new owner comes in, or the current owners suddenly remember they still own the property, and the mall has been torn down leaving only the independently-owned structures. What now?
Ideally, the next step would be a community forum that gives the Arlington neighborhood a voice as to what becomes of this massive property. After all, just dropping a development in a community without collecting feedback almost never works out well.
Does the neighborhood need a farmers’ market? Does it need a giant Walmart? Does it need condos? Probably not, but those are questions best answered by those who live and work in the surrounding area – not developers from New York, not a shady outlet mall company, and probably not even city leadership.
CONCLUSION
Will following these steps be guaranteed to result in a Regency renaissance? Of course not.
There are always plenty of variables for success in development, and there’s always a chance that even the best community-sourced ideas will fail. A massive redevelopment project at Regency would be a huge risk for whoever takes on the task, and one wrong move could make the whole thing a fast track to bankruptcy.
But the only thing worse than risking it all is letting the property keep falling apart, which guarantees that its value will keep on dropping until it bottoms out. The smart money, at this point, is in community-oriented redevelopment.
Guess we’ll have to wait and see if anyone is up to the task.
