One segment of the real estate investing market we are constantly monitoring is the redevelopment of older malls into the new consumer paradigm including experiential retail. It was just announced that an older Lehigh Valley mall is being purchased, potentially for redevelopment.
The Westgate Mall in Bethlehem which was originally built by Harold S. Campbell in 1973, and sits on just over 22 acres, was just purchased by Onyx Equities for a reported $30,000,000. The previous owner Mark Pepitone reportedly invested $5,000,000 into the property in 2015 as part of a redevelopment which included adding SkyZone as a tenant.
From the HFF Press Release:
Holliday Fenoglio Fowler, L.P. (HFF) announces the sale and financing of Westgate Mall, a 270,000-square-foot enclosed mall in the Lehigh Valley community of Bethlehem, Pennsylvania.
The HFF team marketed the property on behalf of the seller. Additionally, HFF worked on behalf of the buyer to secure financing. New ownership is the joint venture between Onyx Equities, LLC and PCCP, LLC.
Situated on 22.6 acres on Schoenersville Road, Westgate Mall is adjacent to the intersection of Route 22 and Route 378, providing quick regional access to Lehigh Valley, Philadelphia and New York. More than 93,900 residents earning an average annual household income of $71,641 live within a three-mile radius. Westgate Mall is anchored by Weis Markets, Rite Aid and Sky Zone; was formerly anchored by The Bon Ton; and is adjacent to Lehigh Valley Hospital.
Jon Harris (@ByJonHarris) of The Morning-Call has some excellent insights into how the redevelopment of the mall could potentially happen, New owner of Westgate Mall in Bethlehem: We plan on ‘revitalizing this well-located retail center’.
Jeff Green, a partner at Hoffman Strategy Group, a retail consultancy, said Onyx has pumped money into its acquired retail properties before, specifically pointing to an ongoing redevelopment at Hazlet Town Center in New Jersey. Green also pointed out that Onyx has non-retail properties, including office buildings in New York and New Jersey.
“They own a lot of non-retail properties, so I wonder if their play here is to redevelop with a mix of retail and non-retail uses,” Green said.
As it is now, the mall is anchored by Weis Markets, Rite Aid and SkyZone, after the shopping center lost its largest tenant, Bon-Ton, earlier this year. The 10-acre parcel that includes the former Bon-Ton is adjacent to Lehigh Valley Hospital-Muhlenberg, which has long fueled speculation that the site could eventually serve a medical purpose, among other redevelopment options.
For those interested in how Onyx Equities redevelopment of the Hazlet Town Center has progressed can check their website which lists current availabilities and property information.