A Miami real estate development company has signed an option to buy St. Petersburg's long-struggling Gateway Mall for an undisclosed price.
Michael Swerdlow Cos. Inc. plans a major overhaul of the three-decades-old mall at 7885 M.L. King (Ninth) St. N, but has the right to drop out of the deal if the complicated economics of the project won't work.
"We've still got several different plans for a major reconfiguration of the mall, but it's hard to determine which way we'll go until we determine what anchor tenants we're working with and how the existing anchors fit into the economic feasibility," said Sid Atznon, Swerdlow's senior vice president for development.
The challenge of turning the mall around is daunting. Some big tenants are paying low rent based on leases signed decades ago. The mall was built when Ninth Street was a bigger thoroughfare linking St. Petersburg to the Howard Frankland Bridge, but the opening of Interstate 275 diverted much of its traffic.
Big mall anchors these days want to be on major highways. Now M.L. King (Ninth) Street N carries fewer than 30,000 vehicles a day, about half that of nearby Fourth Street N, which, because of City Council zoning policies, has become lined with lots too skinny for the taste of most national retailers. The result has sent most big retailers flocking to the Tyrone area, which is now about cleaned out of developable large parcels.
Gateway, which has never been a regional mall, has languished since an Ames discount store closed as part of the parent company's bankruptcy. And except for a Publix supermarket, a small Scotty's and a JByrons department store, the tenant base is now almost exclusively local merchants.
Today only 50 percent of the mall's 386,000 square feet of leaseable space is occupied.
"A lot of tenants have decided to stay a little longer to see what the prospective new owners want to do," said Jim Howard, who manages Gateway for Stuart S. Golding Co. The mall is owned by a Pennsylvania real estate investment trust.
"We want to keep as many of the small tenants as we can, although we cannot say yet whether we will be moving them around," said Atznon.
Atznon would not say which major retailers Swerdlow is counting on. But Target stores, the discount store division of Dayton Hudson Corp., has been looking for a south Pinellas site for four years.
Swerdlow is a diversified real estate company that has been a major developer of industrial parks, office complexes and preparing subdivision sites for homebuilders.
Its biggest presence is in Broward County. In Tampa Bay it owns the 600-acre Tampa Bay Park of Commerce in Oldsmar and Westport Commerce Center in Tampa.