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HOUSTON-A one-time foreclosed, 1.2-million-sf mall, sitting on 43 acres in southwest Houston, has been offered new hope in a sale to a private investor, who’s planning a multi-million-dollar rehab.

The Texas investor, under the name of 7500 SF Ltd., bought Sharpstown Center at 7500 Bellaire Blvd. from Citigroup Global Investments, a successor to Hartford, CT-based Travelers Insurance. Two years ago, Travelers foreclosed for a $20-million note in a take-back from AMP Associates of Sharpstown.

The Insignia/ESG team of Joe Dubuc, business development director in Houston, and Jim Thomas, a senior managing director in Dallas, represented the seller. Herb Shapiro of Shapiro Associates in Houston negotiated the terms for the buyer.

At least a dozen would-be buyers surfaced in the one year that the mall was up for sale, Dubuc tells GlobeSt.com. The interest, he says, was tied to the design, which has 650,000 sf of inline space, more than double the norm. The mall, 72% occupied at sale time, just lost one of its three anchors: JCPenney. Foley’s is in place for the long term while Montgomery Ward’s space was backfilled by Burlington Coat Factory, creating the chain’s second best performer in the city.

Dubuc says the new owner is a value-add specialist. The rehab will be pushed out in three phases over the next five years.

Sharpstown Center was once a prestigious Houston landmark. It fell on hard times as southwest Houston gained a reputation for being a rough area, its streets lined with decaying apartment complexes. Consequently, the mall’s assessment dropped from $27.3 million in 1998 to $14.7 million in 2002, according to the Harris County Appraisal District.

Asking and selling prices are being kept confidential by the deal’s brokers. But, Bill Forrest, senior adviser to Sperry Van Ness of Texas, estimates the property’s value to range between $24 million and $30 million.

Dubuc firmly believes the demographics are back in place for the mall to make a significant comeback. The five-mile trade area has an average household income of $72,000, he says.

Still, Forrest says Houston is poised for a “big devaluation” in the coming year, with retail vacancies still climbing. The city’s vacancy stands at 11% in comparison to 7% in December 2001. Sharpstown Center’s home submarket 14% of its 16.4-million-sf inventory empty. That’s a 6% increase from 11 months ago.

The buyer has awarded property management, leasing and the rehab oversight to Insignia/ESG. Dubuc says the mall has evolved into a mix of mainstream and non-traditional retailers aimed at ethnic shoppers. That strength, he adds, will be used by the leasing team as it sets out to secure ethnic merchants plus regional and national tenants.

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