Indoor malls have been dying for years, but Pacific Retail Capital Partners is plucking two zombies in Palm Desert and New Jersey from the dust.
The Century City-based investor led by Steve Plenge will soon revamp The Shops at Palm Desert, a 1 million-square-foot indoor mall at 72840 Highway 111, Bisnow reported.
The firm is also poised to renovate the 1.2 million-square-foot Bridgewater Commons in Bridgewater, New Jersey, near Princeton University.
Pacific Retail Capital acquired The Shops at Palm Desert in November and Bridgewater Commons in May last year for a combined $425 million, or $193 per square foot.
What’s really valuable in both transactions is the land, according to Oscar Parra, chief financial officer for Pacific Retail
“The reality is we unencumbered the dirt,” Parra told Bisnow, which sometimes entails rezoning land and renegotiating reciprocal easements. “All those efforts have resulted in being able to unlock development value that sits below the mall.”
In the sale of both troubled shopping malls, Pacific Retail assumed existing loans — including $125 million for Palm Desert and $300 million for Bridgewater — while obtaining modifications and extensions.
The 72-acre Shops at Palm Desert, which opened in 1982 as Palm Desert Town Center, was last owned by Westfield. The mall, renovated in 2013, is now anchored by JCPenney, Macy’s, Dicks Sporting Goods and Barnes & Noble.
Pacific Retail is pondering how to partially redevelop both malls with apartments or hotels. That can involve assessing the retail needs, securing new tenants or amending easement agreements with anchor tenants and rezoning parts of the properties, according to Bisnow.
It’s unclear what the company wants to do with the Palm Desert property, other than scaling back its shops and restaurants.
The City of Palm Desert is on board for the potential redevelopment of the property in the center of town along its busiest commercial thoroughfare. Having local officials that are open to redevelopment is key, according to the company.
The mall in Palm Desert “probably has a lot more retail than it needs,” Parra said, so having the city on board with rezoning is ideal.
The Shops at Palm Desert will be the fifth repositioning project that Pacific Retail has announced since fall 2022. Besides Bridgewater Commons in New Jersey, the firm is overhauling malls in White Plains, New York; Lombard, Illinois; and Sandy, Utah.
Pacific Retail Capital Partners, founded in 2008, invests in indoor and open-air malls and shopping centers, with more than $3 billion in assets under management in the U.S., according to its website.
— Dana Bartholomew
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