The Foothills Mall is in for a facelift as new owners look to tear down and refresh parts of the center to broaden its appeal beyond retail.
ÃÛèÖÖ±²¥-based Bourn Companies and FHM Partners LLC closed on the sale of the mall Tuesday and plan a big entertainment presence as well as office space and hotels.
Located at the northwest corner of Ina Road and La Cholla Boulevard, it consists of approximately 515,000 square feet on 52 acres.
Bourn previously owned the mall from 1994 to 1999 and took it from 12 percent occupancy to 95 percent occupancy.
“It’s a great location and obviously we had some great success with it before,†Don Bourn said Tuesday. “It’s hard to find large infill locations like that today.â€
Built in 1982, the mall struggled this past year as the new ÃÛèÖÖ±²¥ Premium Outlet on Twin Peaks Road, near Interstate 10, lured tenants away.
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Foothills Mall’s previous owner, Schottenstein Property Group, became delinquent on its loan.
Data from industry analyst Trepp LLC showed the mall had a debt service coverage ratio of 0.91, which means it was generating 91 cents for every dollar it owed on the $76.5 million loan.
Tuesday’s sale price was not disclosed and it was not yet available through public records at the Pima County Recorder’s Office.
Schottenstein Property Group did not respond to requests for an interview.
“That’s been the major challenge for the project, with retail evolving the way it is landlords have to make significant investment to keep up,†Bourn said. “They were in a tough position and not able to do that.â€
The three big tenants, Barnes & Noble, Ross and the AMC Theater, all do well, he said.
Nationally, enclosed malls have seen a big decline in shoppers, and developers have turned to outdoor models.
“We don’t have any fixed ideas about what it should be,†Bourn said. “There are a lot of enclosed malls that are performing well. It’s all about the tenant mix and environment.â€
He said casual conversations with retailers have prompted a lot of interest in the location.
“Our thought here is the mall needs to become something very different than it has been,†Bourn said. “We need to make the mall feel like it was built, not for 30 years ago, but for 10 years from now.
“We’re certainly going to focus on external areas and make sure it is a comfortable environment where people want to go,†he said.
“Along with that, we’re not ruling out that there could be an internal mall component.â€
The mall is about 73 percent occupied.
Broker Greg Furrier, with Picor Commercial Real Estate, was an early investor in the Foothills Mall and said he was glad to see it in the hands of local owners again.
“I think the neighborhood demographics are great at that location,†he said. “It thrived under local ownership before and I think those guys will do good with it because they’re sophisticated investors and in touch with the community.â€
Bourn said the project is consistent with the company’s desire to update old retail space.
They bought the dilapidated Wilmot Plaza in 2013 and revitalized it with new retail, attracting tenants such as Dick’s Sporting Goods and Nordstrom Rack.
Bourn Companies is also developing a new shopping mall on Irvington Road and Interstate 19, across the street from the Spectrum Mall and a mixed-use building downtown with office, retail and restaurant space as well as a bowling alley.
“We try to focus on projects that we can make profitable and work from a business standpoint,†Bourn said. “We also want to enhance the community with high-quality design, and we see this as a real opportunity to be a central focus for the northwest part of ÃÛèÖÖ±²¥.â€
