Prologis Expands Beyond Industrial With New Mixed-Use Build
The REIT has acquired the Hilltop Mall in Richmond for $117 million with plans to redevelop the property into a wide range of uses.
For the first time, industrial powerhouse Prologis is looking beyond the industrial sector. The REIT has acquired the nearly empty Hilltop Mall in Richmond, CA for $117 million, according to news reports. The property will accommodate a wide range of redevelopment opportunities, from industrial to retail and residential uses.
Prologis says that the purchase marks the firm’s foray into the mixed-use development space. “The acquisition of the Hilltop Mall marks the beginning of our efforts to pursue a mixed use development that includes residential, retail and modern logistics facilities, which will spur further reinvestment, job growth and economic opportunity,” the firm said about the purchase in an emailed statement to GlobeSt.com. “We are excited to make this investment in the community and are deeply committed to working with the City of Richmond and residents to promote the revitalization of the Hilltop area.”
While the property can accommodate multiple uses, Prologis has said that it will not pursue the redevelopment of the mall. Indoor malls were devastated during the pandemic, a fatal blow after years of struggling to compete with online shopping and entertainment-driven retail concepts. According to Dan Villalpando, a partner at Cox, Castle & Nicholson, the pandemic highlighted non-essential or unnecessary retail categories, and indoor regional malls were at the top of that list.
The vacancy rate was a clear example of the challenges for indoor malls. According to research from Moody’s Analytics REIS, the mall vacancy rate was the highest in 20 years at the end of 2020. Asking rents followed, falling .6% over the year.
With these stats, it isn’t surprising that Prologis plans to pursue an alternative path at the Hilltop Mall. The property sits on 77 acres and totals 1.1 million square feet. Prologis acquired the property from a joint venture between LBG Real Estate and Aviva Investors. The joint venture acquired the property in 2017 for $23.8 million. They brought the property to market in August.
Prologis is in the early stages of development proposals, and has not yet announced its plans for the project.