THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, May 11, 1996 TAG: 9605110304
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN AND STEPHANIE STOUGHTON, STAFF WRITERS
LENGTH: Medium: 75 lines
Make way, MacArthur Center. You may be getting some competition.
Mall Properties Inc., the owner of the Coliseum Mall in Hampton, announced Friday that it plans to build a regional upscale mall in the northwestern tip of Newport News.
The New York City-based developer has a two-year option to buy 100 acres of land from the city's Economic Development Authority for $5.875 million. But, so far, that's about all it has.
The project still needs financing and tenants.
Mall Properties plans to build a two-level mall on 85 acres of the land and possibly develop a hotel and a stand-alone store, like a grocery, on the remainder, said Paul Miller, director of planning and development department for Newport News.
The proposed two-level mall would house three anchor department stores and contain at least 750,000 square feet, but could expand to as much as 1 million square feet, said Richard P. Steinberg, executive vice president for the company.
Construction costs would range between $75 million and $100 million, according to preliminary estimates.
Mall Properties is still seeking private financing for the mall, Miller said. No tenants have signed leases yet, Mall Properties said.
The shopping center would be located at the intersection of Yorktown Road and Jefferson Avenue, right off the Interstate 64 exit.
A location at the northern part of Newport News was crucial for capitalizing on the high-income population of York County, Williamsburg, Gloucester County and other suburban areas north of Williamsburg, according to the developer's market study.
``It's a logical development,'' Miller said, ``because the population is moving up the Peninsula. They thought there was enough of a population base, a trade area, for this kind of development.''
Mall Properties' announcement, however, raises questions about how its proposed shopping center would compete with Norfolk's plans for MacArthur Center, a $270 million mall anchored by Nordstrom and Dillard department stores. The three-story, 1.1 million-square-foot MacArthur Center was based on plans to draw shoppers living more than 50 miles away.
``Consumers coming from Richmond and Williamsburg seeking a more upscale mall will stop at this mall rather than continue on to MacArthur Center,'' said Kenneth M. Gassman Jr., a retail analyst with Davenport & Co. of Virginia. ``It would serve as a roadblock.''
But Gassman and others in the retail and real estate industries don't think the mall is a done deal. They say they'll pay more attention when the project attracts anchor businesses and financing.
``When they break ground, then you know it's going to happen,'' said Gassman.
Others are more optimistic.
``I think Mall Properties is a good company,'' said Harvey Lindsay Jr., whose company brokered the deal. ``I feel there's a pretty good chance this will work out.''
Mall Properties will split the cost of infrastructure improvements to the property and the surrounding area with the city of Newport News. The company will pay up to $3.6 million for off-site costs like road improvements, storm drainage, sanitary and sewage costs, Miller said. The city would chip in another $3.6 million for improvements.
The Newport News mall has no name. It's expected to generate between $2.5 million and $3 million annually in sales and real estate taxes for the city, said John Munick, chairman of the Economic Development Authority.
The shopping center can generate more than $25 million in wages during construction and create 1,400 permanent jobs with an annual payroll exceeding $17.5 million when it opens in the fall 1999, he said.
KEYWORDS: PROPOSED MALL NEWPORT NEWS by CNB