Big Chunk of Detroit's Oldest Mall Sold for $31M

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Big Chunk of Detroit's Oldest Mall Sold for $31M

Posted by Alex Finkelstein 01/26/09 9:00 AM EST
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Northland Center Mall

(DETROIT, MI)--Almost half of the 1.7-million-square-foot Northland Center, reputed to be the oldest mall in the U.S. and one of metro Detroit's largest retail centers, is under new ownership today.

New York City-based Ashkenazy Acquisitions Corp. paid Jager Management Inc. of Jenkintown, PA, $31 million or about $47 per sf for 663,000 square feet for the 120-acre property in suburban Southfield, MI.

The space occupied by Macy's, reputed to be the largest in the Macy's chain, and Target, was not part of the transaction. The two retailers anchor the center at 21500 Northwestern Highway.

Marcus and Millichap brokers Mark Taylor, Dean Zang, Mike Dillon and Steven Chaben participated in the closing.

Mark Taylor

The deal was difficult. It took six months to complete.

"This transaction presented numerous challenges that Dean and I were able to resolve because of the high level of cooperation and patience exerted by both the buyer and seller," says Taylor.

Among the challenges: The assumption of a loan "in this very difficult capital markets environment and the erosion in the property's rent roll," the broker adds. At closing, Northland Center was 70 percent occupied.

Spenser Yabion

Other challenges included almost daily falling property values.

"We went under contract in July and the global financial crisis intensified in September," Taylor recalls. "During the entire transaction process, we faced daily negative press reports on the state of the commercial real estate sector and lending market, as retail property values continued to fall nationwide."

Spencer Yablon, Marcus & Millichap's regional manager in Philadelphia, says "closing this sale at the height of the global financial crisis is a testament to the perseverance and excellent brokerage skills of our investment specialists."

Dean Zang

Taylor and Zang, work out of the Philadelphia office and represented the seller. They also found the buyer. Dillon is from Chicago; Chaben, Detroit.

Zang is confident the new owner will turn around the property.

"As the retail sector continues to face losses due to a downturn in consumer spending, landlords across the nation have encountered

Northland Center Mall

some significant leasing issues," he notes.

"The new owner plans to make significant capital improvements. A major repositioning and changes to the tenant mix should assist in turning this property around."

Besides Macy's and Target, other tenants include Champs Sports, Coffee Beanery, Lens Crafter, Lady Footlocker, Payless ShoeSource, Stride Rite and Carlton Cards & Gifts.

The J. L. Hudson Co., once a major national Detroit-based retailer, commissioned architect Victor Gruen in 1954 to build the company's first satellite store in Southfield. The project was also the first regional shopping center in the U.S., according to local historians.

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