KANSAS CITY—As reported in GlobeSt.com last month, BIG Shopping Centers USA just made its first acquisition in Kansas City. And Stanley L. McElroy, Jr., president of the Beverly Hills, CA-based subsidiary of BIG Shopping Centers, now tells GlobeSt.com that in addition to Kansas City, the company also plans to expand even further into the Midwest, and has set its sights on centers in Omaha and Minneapolis.
“We’re not a value-add investor,” he says, looking to do renovations and make quick sales. “We place our equity in places where we intend to stay for a long period of time,” and that means the company “wants to focus on areas where we think there is the long-term potential for job growth.”
Currently, most of the company’s investments have been near coastal markets and in cities like Atlanta and Dallas. “But we don’t have to invest there, or in a DC, Boston, Los Angeles or New York,” McElroy says. For example, the company began making big investments in Pittsburgh once the depressed steel town began diversifying its economy into banking, medicine, higher education and other sectors. “The city did a complete 180.”
And the recent acquisition of Creekwood Commons, a 206,000-square-foot shopping center in Kansas City’s rapidly expanding Northland market, gave the company a dot on the map in the center of the country. “I don’t see Kansas City as having had as significant turnaround as Pittsburgh,” he adds, but it has built a very diverse economy based on financial institutions, transportation, professional services and heavy manufacturing, and BIG USA wanted to be a part of it.
BIG USA also recently acquired the Village Pointe center in Omaha, and is currently researching several opportunities in Minneapolis. Like Kansas City, Omaha has also made huge strides in diversifying its economy. In addition to hosting long-time corporate tenants like Gavilon, Union Pacific and Berkshire Hathaway, the downtown has seen the same demographic shifts that have brought thousands of younger people and families into CBDs across the Midwest. Multifamily developments have sprouted up, alongside more entertainment options such as a new baseball stadium and an arts center.
“We’re starting to learn about the Midwest markets, McElroy says. “Another reason we’re looking there is that there are a number of markets outside of Chicago that have less intense competition for assets,” giving the company opportunities to get better yields.
Creekwood Commons was a typical transaction for BIG USA in that it acquired a majority interest from the operator, in this case Copaken Brooks, who will continue to lease and manage the property.
“We want to marry up with the right operator,” McElroy says, “and for us that means one with significant market knowledge.”