Macerich Purchase Bodes Well for Crossroads

BOULDER, CO-When Macerich confirmed it will pay $1.475 billion for Phoenix-based Westcor, it bode well for the redevelopment of an unusual holding in Macerich’s portfolio–the floundering Crossroads Mall here. Crossroads’ biggest competition was the 1.49-million-sf FlatIron Crossing along US 36 in nearby Broomfield.

The opening of FlatIron in the fall of 2000 was the final nail in the coffin for Crossroads, which sits in the heart of a city that is notoriously difficult to work with.

During a conference call with analysts and GlobeSt.com, president and chief executive officer Art Coppola says owning both malls will give him an ”edge” in dealing with Boulder. In a later interview with GlobeSt.com, Coppola says he probably didn’t choose his words carefully enough when speaking to the analysts.

He explains that owning the two premier retail sites along the northwest sector along the corridor, he will be able to bring better retailers to Crossroads than before. For example, there currently are restrictions that would prevent some tenants at FlatIron from moving to Crossroads. Those will go away when the purchase is consummated, he explains.

Coppola also notes the Boulder city council took a straw poll and by an 8-1 margin indicated it would approve an $80-million tax increment financing to turn Crossroads into a mixed-use development. The project would include 600 housing units, a movie theater, retail and restaurants and a transportation hub.

Such a project carries a higher risk than just scrapping it and building more retail there, Stan Zemler, executive director of the Boulder Chamber of Commerce, tells GlobeSt.com. But, he notes, Crossroads clearly is not destined to return to its role as a regional mall.

Zemler tells GlobeSt.com he wouldn’t be surprised if Macerich joint ventures the Crossroads project and turns over the housing component to someone else. He says someone such as Trammell Crow Residential, with experience in urban housing, would be a likely candidate.

”It’s always been our intention to joint venture the housing component,” Coppola tells GlobeSt.com, although he notes it’s way too early to say who his partner might be.

During the analyst call, Coppola notes that they might consider selling some of the ”one-off malls.” He stressed several times that as the only buyer of Westcor’s portfolio, he has the option to do joint ventures, outright sales, or bring in partners.

Asked by GlobeSt.com if he considers FlatIron a ”one-off mall,” because it is the only regional mall it has in Colorado, while in Arizona, by contrast, it dominates that market.

”We might at some point, although I certainly have no intentions of selling it at this point,” Coppola tells GlobeSt.com. ”I would want to play out my hand at Crossroads, first. If for some reasons we couldn’t get anything going at Crossroads, we might consider looking at selling it, but we have nothing like that in mind right now.”

Although FlatIron is the second largest mall in Westcor’s portfolio, its performance lags behind the average mall in Westcor’s portfolio, which has average sales per sf of $407.

But considering the ”tech train wreck,” that occurred along the US 36 corridor where FlatIron is located, the mall, with sales of about $388 per sf, is performing well, he says.

And, clearly, the best years are ahead for FlatIron, he tells Globest.com.