Horizon Outlet Center In Line For Makeover
Horizon Group Properties Inc. hired commercial real estate firm Grubb & Ellis/Paramount Properties of Grand Rapids three months ago to help formulate redevelopment ideas, study the local retail market and its needs, and recruit retailers that would complement its existing tenant mix with traditional and value-oriented stores.
The goal is to create “the optimum shopping experience for this site,” said Bill Bussey of Grubb & Ellis/Paramount Properties.
“There’s no limit to the creativity you can apply to this project,” Bussey said. “We are, in fact, building a much improved center around the existing tenants.”
Horizon Group Properties, working with Grubb & Ellis, has conceived five varying scenarios for the shopping center, one of which calls for reconfiguring the site to improve parking and traffic flow by demolishing one building along the eastern boundary and constructing new retail space along the southern edge, in front of the Country Inn & Suites hotel and Star Theater.
The first step is to sign an anchor store for the mall before finalizing construction plans, said Tom Rumptz, senior vice president for Horizon Group Properties.
The Holland center presently consists of 195,000 square feet of retail space that sits on 72 acres of property that Horizon is using to lure new tenants.
“We want to find somebody that will make an impact first, then we’ll work with other users,” Rumptz said. “If you look at all the property that can be built out, there are a lot of opportunities we have there.”
The effort to reposition the shopping center comes following a massive retail buildup in Holland in the past 14 years, much of it along the James Street and U.S. 31 corridor. When it opened in 1988, the outlet mall and the neighboring Westshore Mall, located to the north across James Street, largely stood alone as retail destinations on the heavily traveled corridor.
The opening of both malls triggered an unprecedented period of retail development along U.S. 31 in Holland that brought numerous national retailers to town and the development of new “power centers,” the combination of which posed tough competition for the outlet mall and its stores.
Many of the outlet stores typically locating in outlet malls also don’t like competing in a market where its wares are sold at other retailers nearby, such as Sears and J.C. Penney, Rumptz said. That, in turn, inhibited Horizon’s ability to lease space, he said.
Bussey likens the initiative in Holland to the major renovation Eastbrook Mall in Grand Rapids recently undertook to reposition itself in the market, which included a name change to Centerpointe Mall.
“Holland has grown to the point where there are a lot of shopping alternatives,” Bussey said. “As the retail environment changed, it caused Horizon to look at ‘what do we need to do to make it better?’”
Horizon Group Properties — a Chicago-based firm spun off in the wake of the 1998 merger of Prime Retail of Baltimore, Md., and the former Norton Shores-based Horizon Group — has 11 outlet centers and one power center in nine states, with a collective total of more than 2.5 million square feet of retail space that includes the Lakeshore Marketplace in Muskegon. The real estate investment company, which manages centers with low occupancy and sales histories, recorded a net loss of $19.3 million in 2001 on revenues of $23.2 million.
Horizon completed a five-year, $3.5 million refinancing of the Holland outlet center in June 2001 with Republic Bank, according to statements filed with the Securities and Exchange Commission. Proceeds from the refinancing went toward reducing Horizon’s debt.
Bussey believes the Holland shopping center has a vibrant future. The center is a “proven retail location” along the eastern side of U.S. 31, south of James Street, and is located in the retail heart of the Holland area.
“We can offer something here that nobody else can offer,” he said. “We see some possibilities to bring people into Holland that are not here, and this would be the perfect spot for them.”
Bussey expects to see activity at the shopping center occur this fall with new tenants opening stores or new construction beginning. Grubb & Ellis presently has two separate proposals out for the leasing of 10,000 square feet and 20,000 to 25,000 square feet of retail space. There’s also a proposal out to a “very interested big-box retailer,” Bussey said.
The specific reconfiguration that the shopping center will undergo depends on the mix of new tenants Horizon is able to sign, he said.
“It’s a constantly evolving thing until you get tenants in there,” Bussey said. “It can take different turns down the road.”