Macy's $16.5 Million Move: Could This Georgia Mall Become a Real Estate Goldmine?
Sep 24, 2024 • 5 min read
Macy’s is selling two of its stores at the struggling Gwinnett Place Mall in Duluth, Georgia, for $16.5 million, a move that could signal a major turning point for the once-thriving retail center. This sale advances Macy's goal of shedding underperforming real estate while giving Gwinnett County the opportunity to revitalize the mall into a vibrant mixed-use development.
Gwinnett County's Board of Commissioners has approved the purchase of the Macy's buildings and their 23-acre sites at 2100 Pleasant Hill Road. The acquisition, set to close in November, includes 293,059 square feet of retail space comprising a Macy’s department store and a Macy’s furniture store. This transaction adds to the 39 acres the county's Urban Redevelopment Agency bought in 2021, bringing its total holdings at the mall to 76 acres.
"This allows us to revitalize that corridor," said Nicole Love Hendrickson, Gwinnett County Board Chairwoman, in an interview with CoStar News. "This redevelopment is going to be a game-changer."
The county plans to issue a request for proposals early next year to find a developer for the mixed-use project. The vision includes a "Global Villages" concept featuring housing, an international community cultural center, and retail and office space oriented around a central park.
Bill Read, executive vice president of Retail Specialists, recalled the mall's former glory. "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," he said in an email to CoStar News. "The opening of the Mall of Georgia in 1999 and Sugarloaf Mills in 2001 started the downfall of the mall."
Macy's decision to sell aligns with its broader real estate strategy announced in February. The retailer aims to generate up to $750 million by selling properties like stores and distribution centers. Macy's also plans to close 150 underperforming stores and invest in a fleet of 350 "go-forward" locations to modernize its presence.
"Our new strategy is designed to create a more modern Macy’s Inc. and enhance the customer experience," a company spokesperson said in an email to CoStar News.
The county has arranged a sale-leaseback agreement with Macy's, allowing the stores to remain open until March, covering the crucial holiday shopping season. This delay will enable Macy's to prepare for store liquidation and accommodate employees.
"As far as most dead malls, the area surrounding this mall is healthy and growing and has a very bright long-term future," Read noted. "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 redevelopment is expected to invigorate not just the mall site but also the surrounding businesses. By transforming the mall into a mixed-use hub, the county aims to drive economic growth and community engagement.
"The county has done a masterful job thinking about the future of Gwinnett residents in its planning for the redevelopment," said Lee Ann Korst, senior vice president with CBRE’s Public Institutions and Education Solutions practice. "They are forward-thinking about using the underutilized site as a catalyst and to the benefit of the surrounding community and taxpayers."
This project mirrors a national trend where struggling malls are being reimagined to include residential, cultural, and commercial spaces. According to the National Association of Realtors, properties within walkable mixed-use communities can command premiums of 5% to 10% compared to those in traditional suburban areas.
"The fact that a county has acquired a mall is innovative and groundbreaking," Hendrickson emphasized. "This redevelopment will help reinvigorate the mall site and the businesses in the surrounding area."
With careful planning and community input, Gwinnett County's bold move could turn a struggling mall into a real estate goldmine, setting a precedent for other communities facing similar challenges. As Hendrickson put it, "This redevelopment is going to be a game-changer."