Macy’s is selling two of its stores at a troubled Georgia mall for $16.5 million, advancing its goal of shedding real estate and paving the way for the redevelopment of the once-bustling retail center.
Gwinnett County has given the go-ahead for its purchase of the Macy's buildings and their sites, totaling 23 acres, at Gwinnett Place, a mall at 2100 Pleasant Hill Road in Duluth, Georgia. The county's Board of Commissioners this week approved the acquisition by the Urban Redevelopment Agency of Gwinnett County, as well as the issuance of bonds to fund the purchase.
The local redevelopment agency plans to buy 293,059 square feet of retail buildings, a Macy’s department store and a Macy’s furniture store. The county expects the deal to close in November, with a request for proposals issued for the mixed-use project early next year. In 2021, the agency bought a 39-acre portion of the mall site, and the latest deal gives it 76 acres. CBRE is working with the county on a request for a proposal and finding a developer, according to Gwinnett County Board Chairwoman Nicole Love Hendrickson.
Department store chains such as Macy's have traditionally been anchor tenants at malls, but the retailer has actually been rolling out small-format, off-mall stores and closing some mall locations. And in the current retail environment, Class B and Class C malls have experienced woes, while Class A malls have been faring better — some are even thriving.
"When I moved to Gwinnett County in 1996, this was the mall: two stories of retail and good anchors and the mall was always busy," Bill Read, executive vice president of real estate firm Retail Specialists, described Gwinnett Place in an email to CoStar News on Wednesday. "The opening of the Mall of Georgia in 1999 and Sugarloaf Mills in 2001 started the downfall of the mall."
The county has been working for years to assemble parcels at the mall and solicit feedback on what the future of the property should be. The county conducted two public input studies, the Equitable Redevelopment Plan and the Gwinnett Place Mall Site Revitalization Strategy, to identify the community’s needs for the redevelopment of the mall site and surrounding area.
Redevelopment plan
The plan now calls for a Global Villages concept that envisions housing, an international community cultural center, and retail and office space oriented around a central park. Similarly, struggling malls around the nation are being transformed with the addition of new uses to drive foot traffic.
New York-based Macy's — owner of not only its namesake department-store chain but also Bloomingdale's and Bluemercury — said the sale of the two Gwinnett County stores is part of the real estate initiative.
But the pending sale fits into the real estate initiative that the retailer unveiled in February. Macy's said it planned to generate as much as $750 million from selling properties such as stores and distribution centers. The retailer also announced that it planned to close 150 underperforming stores and invest in a fleet of 350 “go-forward” locations.
“Our new strategy is designed to create a more modern Macy’s Inc. and enhance the customer experience,” a company spokesman said in an email to CoStar News on Wednesday.
Read voiced optimism about the revamped mall’s prospects.
"Gwinnett County has poured millions into recapturing this land with future plans to integrate it into the surrounding community," Read said. "As far as most dead malls, the area surrounding this mall is healthy and growing and has a very bright long-term future. Like any dying mall, it’s a slow process, often over decades but all the right components surround this mall for a [healthy] future. What is always an issue for mall redevelopment is the cost. The county is the perfect long-term buyer for the mall land since most developers cannot afford to spend this type of money and wait for a return on their investment."
The county has struck a sale-leaseback deal with Macy's for its stores, Hendrickson told CoStar News. The stores will remain open until March, so throughout the holiday season. The store closing delay will allow Macy's to prepare for the store liquidation and to accommodate employees, according to Hendrickson. Macy’s confirmed the sale-leaseback arrangement.
Macy's, Beauty Master and Megamart remain open at the mall, while stores such as Sears, J.C. Penney and Belk have closed.
Larger redevelopment
The county was ready to proceed with the redevelopment with the 39 acres it purchased in 2021, but earlier this year it was approached by broker Atlantic Retail about Macy's site, according to Hendrickson. That purchase will allow the redevelopment to expand its footprint, she said.
The redevelopment will help reinvigorate the mall site and the businesses in the surrounding area, Hendrickson said.
"This allows us to revitalize that corridor," she said. "This redevelopment is going to be a game-changer."
And the fact that a county has acquired a mall is "innovative and groundbreaking," according to Henrickson.
"The county has done a masterful job thinking about the future of Gwinnett residents in its planning for the redevelopment,” Lee Ann Korst, senior vice president with CBRE’s Public Institutions and Education Solutions practice, said in a statement.
Korst added that “they are forward thinking about using the underutilized site as a catalyst and to the benefit of the surrounding community and taxpayers. ... By attracting top developers and fostering public-private partnerships, the Gwinnett Place Mall project will continue a focus on redevelopment of urban sites into economic hubs in the community."