The $58 million sale of Southgate Mall to Washington Prime Group closed this week, completing what’s expected to be one the largest mall transactions this year in the Pacific Northwest, according to NKF Capital Markets, which handled the deal.
In a statement on Wednesday, NKF confirmed the sale of the 448,000 square-foot property located on 44 acres in Midtown Missoula.
“Southgate Mall presented a unique opportunity to investors in that it has been privately owned by its original development group – the Lambros family – for over 38 years,” said Thomas Dobrowski, executive managing director for NKF. “The redevelopment of the former Sear’s box, which began in 2015, has led to the mall’s recent transformation, with newly executed leases and a hybrid open and enclosed town-center development, which appeals to today’s users and shoppers.”
Southgate Mall Associates, led by Peter Lambros, unveiled its vision to transform the property into an open-air town center several years ago.
The mall opened in 1978 and its owners saw the redevelopment, which envisioned several phases over a number of years, as a means to keep the property competitive amid a changing retail landscape.
A new AMC dine-in theater opened at the mall in February, followed this week by the opening of Lucky’s Market. Also this year, the city completed and opened Mary Avenue, an east-west connector expected to feed future redevelopment of the property and surrounding neighborhoods.
“Over the past five years, we’ve put into motion the evolution of Southgate – from a mall to a mixed-use town center,” said Lambros. “Washington Prime has the capacity to further Southgate’s development, and (it) shares our development philosophy and commitment to community.”
With the sale now official, Lambros said his firm will focus on developing multi-family housing in the Southgate neighborhood.
In addition to Southgate’s early redevelopment, it has landed or kept a number of new retailers in recent years, though Herberger’s is in the process of liquidating its inventory as part of its bankruptcy proceedings.
Still, Dobrowski said, the mall’s success set it apart from similar properties currently on the market, which don’t meet the quality required by retail REITs.
Retail REITs invest, own and manage large regional malls, outlet stores, shopping centers and other big-box retailers nationally.
“I think the mall’s appeal to investors and its strong sales price are testaments to both the Lambros family’s smart ownership through the years and the future upside for the new owners through the additional lease of remaining vacancies, and the ongoing transformation of the mall into a first-class open-air town center,” Dobrowski said.