Shopping Center To Lose Mall Feel, Gain Residential

LAKE FOREST PARK, WA-Madison Marquette has acquired the Lake Forest Park Towne Center here with plans to open up the enclosed mall on the property and add a residential component. The Washington, DC-based investor's managing director of investments David Brainard tells GlobeSt.com it paid $27 million for the 250,000-sf retail center with plans to spend that much more to remerchandising and rehabilitating the existing retail and add somewhere around 250 residential units.

Madison Marquette is building a "pipeline of projects that take outdated regional malls and retail centers and transforms them into desirable destinations," Brainard says. "Lake Forest Park is a perfect example of a community that has outgrown its existing retail offerings."

The property is on a sloping property such that the second level of the mall is at grade on the back side of the property. Brainard says one of the ideas being bandied about is adding the residential to that back-side second level and opening up the mall on the other side to give it more of an interior courtyard feel. "There will be an area with more commercial and an area with more residential that will be stitched together for a unified feel," he says.

Lake Forest Park Towne Center is currently a hybrid. The enclosed mall is complemented with an exterior strip center wing and four outparcels, two of which are owned by their tenants. The two outparcels Madison Marquette owns are a Bank of America branch and a professional office building. The two it does not own are a Starbucks and City Hall, both of which were originally part of the mall.

The enclosed mall is currently 85% leased, consisting of one 35,000-sf vacancy on the second level. The space had been part of a 100,000-sf Gottchalks and, prior to that, a Lamonts. The previous owner carved up the space and got part of its leased, Brainard says. Current tenants include Albertson's, Gold's Gym, Rite Aid and Third Place Books.

The timeline for the repositioning is 12 to 18 months of planning and 18 to 24 months of construction, Brainard says. "The closest competition is Lynnwood Mall and Northgate, but this is the only thing right in Lake Forest Park," he says. "There's no reason to have an interior mall there; the idea is to open it up and have more of a community gathering place."

Madison Marquette has been active in the Seattle market. Other local redevelopments and repositionings have included Broadway Market on Capitol Hill and 601 Pine in Downtown Seattle. Currently in the market, it is overseeing a re-imaging and remerchandising of The Commons in Issaquah and is handling the leasing for The Landing at Renton, a 650,000-sf retail and residential development breaking-ground this week.