A nearly 75-year-old mall is headed for redevelopment after being sold to new owners.
Retail landlord Macerich has sold the 2 million-square-foot Lakewood Center mall for $332.1 million to a joint venture of three developers and investors, CoStar reported. The move could end up transforming the nearly 150-acre property into a mixed-use development that would reimagine one of Southern California’s largest malls.
The buyers are mixed-use-forward investment firm Pacific Retail Capital Partners; Lyon Living, which will handle housing and lifestyle portions of the future development; and Silverpeak, which will provide investment capital and strategic guidance.
Lakewood Center, located in the gateway city of Lakewood southeast of downtown L.A., is 89 percent occupied and generates approximately $343 in sales per square foot, according to CoStar. That puts it in the middle of the pack among malls across the country.
As customers opt more for online shopping and legacy mall brands close their doors, the new owners will have to evaluate the presence of some major tenants at the mall. With Forever 21’s departure and JCPenney and Starlight Cinemas’ leases expiring this year, nearly 20 percent of the property’s rent could be in jeopardy.
The mall’s value has tumbled by more than half over the past decade. In May, S&P Global Ratings valued the mall at $280 million, representing a 55 percent drop from its high of $630 million in 2015.
Macerich bought the mall in 1975 for $160.1 million. In 2015, the Santa Monica-based real estate investment trust sold a 40 percent stake in the property, though it ended up buying that slice back last year from GIC Real Estate, per CoStar.
Last year, Lakewood Center became subject to two commercial mortgage-backed securities loans totaling $410 million. Deutsche Bank originated the loan and Wilmington Trust serves as trustee. Both loans are due to mature in January.
Retail property sales across the Los Angeles area have climbed 8 percent up to $3.3 billion, according to CoStar. Average retail vacancy sits at around 6 percent and new retail construction is down 13 percent year-over-year.