Osceola Square Mall Changes Hands

KISSIMMEE, FL-The 19-year-old, 360,000-sf, 75%-leased Osceola Square Mall has been acquired by the Grootwassink/Hotzler Real Estate Co. of Eden Prairie, MN, a specialist in reviving distressed properties, according to industry sources. The seller was Steven D. Bell & Co. of Greensboro, NC.

According to Mark Hotzler, a partner in Grootwassink/Hotzler, the class C shopping center's price was $25 per sf or a total $8.1 million. He adds the company will spend $10 million on renovations. Comparable retail properties in better physical condition might have sold for at least double that price, area brokers tell GlobeSt.com.

This was a direct deal between buyer and seller, so no brokers were involved. "We got the deal done ourselves," Hotzler says. He also tells GlobeSt.com he plans to make the mall "competitive with nearby shopping centers because we know this business inside and out. We know how to get deals done."

This is Grootwassink/Hotzler's first acquisition in Florida. "We hope to be doing others down the road," Hotzler tells GlobeSt.com.

Although Osceola Square Mall is only 10 miles east of the Walt Disney World entrance on US 192, the shopping center has not been a driving success over its lifeline, brokers dealing in Osceola County retail properties tell GlobeSt.com. Average asking gross rents at Osceola Square Mall are $6 to $12 per sf compared to comparable area rents of $18 to $38 per sf, Orlando retail brokers tell GlobeSt.com.

Beall's Department Stores Inc. and Ross Dress for Less anchor the mall at 3831 W. Irlo Bronson Memorial Highway. The 2.8-million-sf Florida Mall, 10 miles away, has the dominant market share in the south Orange County and north Osceola County submarkets.

When it was built in 1986, Osceola Square Mall was the first enclosed shopping center in Osceola County which had a permanent population at the time of about 150,000. The last Census gives the largely agriculture and cattle-raising county a population of 172,493.

Chris Whittaker, a local retail observer, notes the mall initially had "a limited amount of success, at least until the Wal-Mart that was an original anchor at the mall, moved down the street as part of the conversion to a Super Wal-Mart." At the same time, Whittaker, recalls, "Walt Disney World expanded its retail core to include a 24-screen theater--a far cry from the six-screen complex attached to the mall--and a series of shops."

Whittaker says that when most of the mall's national stores left the center around 1999 and non-retail groups started occupying storefront sites, "this was illustrative of a mall on its last legs."