Conventional wisdom holds that nobody loves shopping malls anymore. But the Ridgedale Center mall in Minnetonka now has bullish new owners: a joint venture of two global real estate firms that are upbeat on big “super-regional malls.” Toronto-based Brookfield Property Partners and Los Angeles-based CBRE Global Investors now own the mall after a deal that closed earlier this week.
“We definitely like the market and the opportunity…the mall has been a great performer there,” said Gary Jaye, senior managing director and head of commercial acquisitions in the Americas region for CBRE Global Investors, said of Ridgedale. “We also think we have great opportunities to add some value.”
Plans ultimately call for adding more retail to the site. Jaye said that outparcels on the Ridgedale site could be developed to add “additional experiential retail” and “also some entertainment venues as well.”
There is no specific timetable yet for the additions. “We’re just looking at preliminary plans right now,” Jaye told Twin Cities Business. “It’s something that we’re taking a very strong look at and spending time on."
Jaye said that the 1.2-million-square-foot Ridgedale is currently more than 97 percent leased and that the surrounding area boasts strong demographics.
Ridgedale was previously owned by Chicago-based GGP Inc., previously known as General Growth Properties Inc. Nordstrom opened a department store there in the fall of 2015, part of a $50 million expansion project by General Growth.
On Tuesday Brookfield Property Partners completed its $15 billion acquisition of GGP, a deal that had been announced last spring. Brookfield already owned one-third of GGP. The Wall Street Journal recently reported that Brookfield had already sold about $4 billion in stakes of properties with various joint venture partners, a move to help pay down the debt of the GGP deal.
Ridgedale is one of three super-regional malls owned by the joint venture between Brookfield and CBRE Global Investors. The other properties are the Cumberland Mall in the Atlanta area and The Parks Mall at Arlington, located between Dallas and Fort Worth in Texas.
After closing the GGP deal, Brookfield now also owns three Minnesota shopping malls outside the Twin Cities: Apache Mall in Rochester, Crossroads Center in St. Cloud and River Hills Mall in Mankato. CBRE Global Investors does not own any stake in those malls.
Commercial real estate veterans recall the Brookfield name in Minneapolis from an earlier era. Brookfield Properties, a predecessor company of Brookfield Property Trust, once owned about 3 million square feet of office and retail space in downtown Minneapolis: RBC Plaza, City Center and the attached 33 South Sixth officer tower, and Gaviidae I and II.
One local retail expert says that Ridgedale could flourish with Brookfield as part of the new ownership group.
“It could give them a fresher look, new resources. Brookfield has deeper pockets,” said Dave Brennan, a University of St. Thomas marketing professor emeritus and former co-director of the school’s Retail Institute
The Nordstrom addition in 2015 positioned Ridgedale well to appeal to the upscale suburbs that surround it. But like Mall of America’s new North wing, Ridgedale has struggled to fill some spaces in the new wing built for Nordstrom. “It’s very difficult in this market to go upscale,” said Brennan. “Only Galleria has had success with it.”
Brennan said Ridgedale would be wise to get out ahead of the trend toward mall diversification: “They should look for unique things you don’t see at other malls—wealth management firms might be appropriate.”
CBRE Global Investors is an independent affiliate of Los Angeles-based CBRE Group Inc., the world’s largest commercial real estate services firm.
While Ridgedale is nearly full, current tenants include anchor tenants such as Sears and JCPenney, two retailers that have been struggling and closing stores. Jaye noted that the Ridgedale stores are still open for business, but added that traditional department stores aren’t as essential as they once were for malls.
“Generally, the mall business is not as reliant on these anchor stores as they were 10, 15, 20 years ago,” said Jaye. “It’s not as critical going forward.”