May 27 , 2012

DBJ Retail Deal of the Year | Village on the Parkway

DBJ Retail Deal of the Year | Village on the Parkway

By: Steven R. Thompson

The Acquisition of Village on the Parkway has the Retail Connection returning to its roots.

The 360,418-square-foot Addison shopping center was the first property acquired by the Dallas-based company when CEO Steve Lieberman started the Retail Connection in 2004.  The company sold the property three years later, deeming it a “financial success,” but Lieberman thought there was always something more they could have done.

“We always felt like as great of a run as we had with it from 2004 to 2007, we certainly didn’t do what we love to do at the Retail Connection, and that is to optimize the asset to its fullest potential,” Lieberman said.

The Retail Connection, along with Lincoln Property Co. and Long Wharf Real Estate Partners, bought the property out of foreclosure in spring 2011 after a competitive bidding process.

When the company put in its final bid, there were 16 other offers, said The Retail Connection’s David Wilson, who is overseeing the project.

“Everybody saw that it was exceptional real estate.  Everybody saw that it had redevelopment potential,” Lieberman said.  “The vision to create the ultimate value is what differentiated us from our competitors.”

Occupancy for the center has dropped below 50 percent and a few tenants have left since the property was acquired.  The Retail Connection, Lincoln and Long Wharf have plans to turn the property into a development with top-tier retailers.

“We are going to tear down half of Village on the Parkway as it stands today and repurpose it as a whole new enterprise,” Lieberman said.

Putt Fuller of The Retail Connection has been working to get top tenants in the space.  Whole Foods is set to open at the center in 2013, and the company is working on a lease with AMC Theatres for the southern half of the project.

These two anchor tenants are expected to raise the bar on the quality of tenants in Village on the Parkway, Fuller said.  It also helped the Town of Addison feel more comfortable with giving $21.4 million in incentives to the project.

“That was key in convincing the City Council to support this development,” said Orlando Campos, director of economic development.  “The two new high-end anchor tenants that will occupy space there will obviously drive other top-tier tenants.”

The incentives mainly consist of a sales-tax-sharing agreement, creating an estimated $19.3 million for the project owners over a 20-year term.  Under the deal, they receive 75 percent of all sales tax generated above $300,000, which is the amount of sales tax revenue the mall currently generates for the city.

Lieberman said the incentives were important for them to justify their investment.

The city agreed to a variety of traffic and roadway improvements around the center.  Addison believed it was finally time to give the project a boost since it’s the largest retail development in the community.

“It had been stagnant for quite some time,” Campos said.  “When the Retail Connection came in, this was an opportunity to reinvigorate that center and basically bring it back to life with a quality development that is aligned with Addison’s corporate culture.”