Regency Court is typical of many of the shopping centers that line the roads all around the Regency area. It was once full with high-traffic stores such as Sports Authority, Comp USA and Office Depot along with a variety of smaller shops. But now most of the storefronts are empty, most of the doors locked and few cars dot the vast expanse of its parking lot.
But Mark Gold has plans for it. He just paid $5 million for the strip center on Arlington Expressway, less than one-fifth of what it sold for a decade earlier, back when it still had those big anchors.
It was about one-third full when he bought it, but this week he promised that it will be 70 percent full in less than six months. His plan is not necessarily retail stores, but entertainment: Big entertainment and about $12 million in improvements.
He talked about a trampoline park, go-karts, bumper cars, arcade, bowling, escape rooms, zip lines … He has done in some of his other centers and while he said he’s not ready to announce specific tenants yet, the former Sports Authority space is already lined with those go-karts, video games and laser tag equipment.
He’s already added new lights to the parking lot and is in the process of new landscaping, roof and air conditioning.
It’ll still have the more traditional shopping center fare, he said. Lumber Liquidators, YouFit gym, Honey Baked Ham and other tenants will stay. Longhorn Steakhouse, on a outparcel in the parking lot, just signed a five-year extension on its lease. Rooms Two Go is not part of the center but does lease parking space from it.
“Anything that brings people is good,” he said.
Gold is from Israel, moved to Canada 35 years ago but still carries his Israeli accent along with a lot of energy. He said he’s been buying a new shopping center every three months for about six years now, and he’s been looking at Regency Court for about 18 months.
“It’s all about the location,” he said.
The 218,000-square-foot shopping center is just west of the Arlington Expressway intersection with Atlantic Boulevard, with access from both the expressway and Southside Boulevard. The roadwork there is finally done and more than 100,000 cars a day drive by on one of those three roads.
Despite the traffic, empty storefronts in the Regency are nothing new, of course. At the heart of it is Regency Square. The mall’s demise has been well documented. Last year, it was supposed to get a rebirth with International Decor Outlet taking over almost half of it. But the few stores that did open there have closed and it sits under the weight of multiple lawsuits coming from all sides.
But there are signs of life. A closed Pier 1 on Atlantic Boulevard was torn down last year and replaced by a new Chipotle restaurant that opened in December. Aldi is scheduled to open this summer in a CB Square space that has been vacant for three years.
And right next door to Regency Court, right at the point of Atlantic Boulevard and the expressway is Regency Pointe. An Indiana company paid $6.7 million for that strip center in 2016. Now it’s undergoing a complete renovation of its facade along with a new roof, work that building permits put at more than $1 million.
Skechers shoe store moved in soon after Sandor Development bought the center. Now ChenMed, a primary care center for seniors, signed a lease last month for 13,500 square feet, the largest space in the center, said George Kleier, vice president of American Commercial Realty.
“It’s going to be entirely different when the work is done,” he said. “It’s going to have a lot more curb appeal.”
Justin Eller, portfolio manager at Sandor, said his company was not particularly targeting the Regency area. Regency Pointe just happened to fit exactly what it is looking for around the country.
“We’re searching for undervalued, multi-tenant properties that we can turn around,” he said. And he was familiar with the challenges of Regency.
“Most of the experts in that market told us there had been a generational change,” he said. “The Regency submarket was where everyone went. But shifts in retail and housing pulled tenants out of that market.”
Occupancy was in the 30 percent range when Sandor bought the center in 2016. With Skechers and ChenMed, it’s moved above 70 percent, he said.
But empty storefronts still dot the strip centers that surround the mall. Regency Park on Atlantic Boulevard appears to be no more than half full, though its leasing agents did not return phone calls to discuss the situation there.
Ollie’s Bargain Outlet opened in that center in 2016, moving taking over a 40,000-square-foot space that had been vacant since Babies R Us left in 2010.
“Ollie’s is very low-rent-paying for an anchor,” said Gary Montour, vice president of Colliers International commerical broker. “The previous tenant was probably paying two or three times the rent Ollie’s is.”
And that, he said, is the challenge for the Regency area.
“Demographics are changing,” Montour said. “Anchors are leaving because they’re not making any sales. Everybody said Home Depot and Target would leave by now, but they’re still there.”
“A lot of nationals have gone to the Town Center,” he said. “It happened with The Avenues, when other stores followed Sears. Now the Town Center has really caused a lot of companies to change from two stores to one store. They put all their money into the one store because that’s where the action is.”
One advantage that the Regency area has is low rates. While the Town Center can top $40 a square foot, Regency Pointe is $16 a foot, Kleier said. Regency Court is even less, ranging from $8 to $15 a foot.
By paying $5 million for 218,000 square feet, Gold paid less that $23 a square foot, a price that Montour said allows him to charge rents as low as $8.
“He’s probably got a plan,” he said.
And Gold certainly talks with the confidence of someone who does.
“I have 6 million square feet around the country,” he said. “I buy it at 30 percent occupancy and bring it to 98 percent. Here, we have enough parking for two centers. But I think we’ll fill it up.”
Roger Bull: (904) 359-4296