The Shuttered Fashion Mall Moves Closer To Redevelopment

Written by on 12.06.16 in MultiFamily, Office, Retail - No comments

After years of litigation, bankruptcies and stalls, the beleaguered Fashion Mall is one step closer to redevelopment.

Proposed Fashion Mall Redevelopment rendering

Proposed Fashion Mall Redevelopment rendering

The shopping complex’s latest owner, Encore Housing Opportunity Fund, cleared a major hurdle Nov. 30 when Plantation’s City Council approved site plans for the $300 million mixed-used project with luxury apartments, offices, restaurants and stores.

The site is prime real estate, spanning about 33 acres on University Drive, north of Broward Boulevard, in Plantation. It has stood empty since 2008, while former owners staved off one bankruptcy, wrestled each other for control and then launched a second bankruptcy and a protracted legal fight.

“Plantation will greatly benefit from the revitalization of the mall, which has languished for many years,” said developer Art Falcone, managing principal of Encore Capital Management.

Encore purchased the former mall site in a bankruptcy auction for $37.7 million in April 2015. It is unencumbered by the ongoing litigation between the property’s former developers. Last week, the City Council approved about 700 luxury rentals, 232,000 square for restaurants, entertainment and retail, and about 250,000 square feet of office space. Construction is slated to begin by June 2017 with delivery within 18 months.

The company brought the office component to market in late October at leasing rates of $20 to $25 per square foot. Falcone said it has since attracted technology companies and others seeking 30,000 to 100,000 square feet to enter the South Florida market. It plans a second office midrise once the first reaches 70 percent occupancy.

Strong appetite for commercial space has accounted for about 20 percent of the retail component through signed letters of intent and pending leases with 12 prospective tenants.

“I remember 28 years ago bringing my youngest kids to this mall. It would be an incredible privilege to have the opportunity to redevelop it,” Falcone said. “It’s amazing how things have changed in 30 years.”

For Fashion Mall, the changes in the last two years have been seismic. The project seemed to gain traction in 2014 when construction crews gutted an office building for a $10 million renovation. But that year the Chinese businessmen who owned the property fought for control of three companies leading the redevelopment. Ousted project manager and minority partner Wei Chen filed for Chapter 7 bankruptcy protection for the companies—Mapuche LLC, U.S. Capital Holdings LLC and U.S. Capital/Fashion Mall LLC.—against the wishes of the majority owner, Chinese steel magnate, Zhen Zeng Du.

Dutried to block the property’s liquidation by converting the bankruptcy case to a Chapter 11 reorganization. He claimed his company, Tangshan Ganglu, invested about $160 million into the project. But he failed at stopping the bankruptcy sale, and the real estate sold at auction to Encore, a Boca Raton real estate investment company.

Meanwhile, Chen and Du continue their dispute in state and federal courts in litigation that has led to attorney sanctions, adversary proceedings and a pending legal malpractice suit against the businessmen’s former lawyers.

Encore is unaffected by the legal wrangling. Falcone said the new owners continue to negotiate letters of intent for about 40,000 square feet of retail space and traveled to New York this week to market the project at the International Council of Shopping Centers conference.

“This part of Broward County is pretty much central Broward now,” Falcone said. “We’re creating a live-work-and-play environment that … we think it will be an attraction for all of central Broward.”

 

Source: DBR

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