By Jon Peterson
New York City-based Rouse Properties is planning on a major renovation on the order of $40 million to the one million square foot NewPark mall retail asset in the East Bay city of Newark, Calif.
“We are planning on spending the most capital in NewPark [than] on any assets that we currently own in our portfolio. We think that there is a great opportunity for us to vastly improve the overall performance of the property,” says Andrew Silberfein, president and chief executive officer of Rouse. He declined to comment on the actual amount that the company will be investing in the property going forward.
Rouse has a strong belief in the property’s location. “I think that the property is in a prime location right off of I-880 and has a strong population base. Our long term goal with the property is to create a top retail experience for the East Bay with this asset,” said Silberfein.
The property is now 90 percent leased and the hope is to add more tenants to the roll in the future. The major anchors for the property are Macy’s, JC Penney, Sears and Burlington Coat Factory. There have been 140,000 square feet of new leases signed for the property. This includes a 55,000 square foot 12-screen AMC Theatre, Toby Keith’s “I Love This Bar & Grill” and John’s Incredible Pizza.
The redevelopment of NewPark will be started this summer and take approximately one year to complete. One part of the project is the proposed restaurant Pavilion. “We are planning on giving our customers a two-story restaurant experience. This will include some places to eat that are either on the first or second floor or both. Some of the restaurants will be outside to give the customers a different feel,” said Silberfein.
The City of Newark has been a big supporter of the improvements planned for NewPark. “We never would have been able to make this project work without the help of the city,” said Silberfein. This includes the economic incentive agreement between the mall owner and the city.
Rouse will be reimbursed for a portion of its capital costs through a share in the increased sales tax revenue. The breakdown is 80 to Rouse and 20 percent to the city.
There is a belief in the brokerage community that NewPark is a very strong asset. “I think the property is a fantastic asset. Rouse has a real opportunity to improve the property as it’s located in an area that is under-served for retail. I don’t think this is going to change in the future as land costs are high and retail competes against other property types like office, industrial and apartments for new development in the East Bay region,” says James Chung, senior managing director and principal with Terranomics Retail Services in its San Jose office.
Rouse has owned the property for around two and half years. It took ownership of the property after the spinoff from Chicago-based General Growth Properties in 2012.
Rouse also owns the Southland Mall in Hayward and the West Valley Mall in Tracy for its other Northern California assets. “We really liked the retail market in this region and would be interested in finding more properties here in the future,” said Silberfein. Rouse is a major mall owner around the country. It has ownership in 34 properties in 21 states covering over 23.5 million square feet.