In yesterday's piece on Northgate, we looked at where Northgate is today -- some successes (the movie theater, the strip center), but still troubling failures (the closing of several prominent retailers, and the barrenness of the outdoor plaza still awaiting its first tenants.)
The plaza is the most worrisome part of the entire project. Last August I had mentioned in these pages my surprise that the plaza construction was moving forward despite the barrenness of the east side of the wing, in which only Marble Slab had taken a new space. I surmised then (hopefully?) that it must be a sign that Northgate Associates had some tenants in the pipeline who were committing to the project.
It's now almost a year later, the new plaza is done, and there's simply more vacant storefronts to fill -- which seems to imply, in the absence of any other announcements from Northgate, that no one's committed to the project. Which is, needless to say, an odd thing to discover only after you've sunk millions of dollars into a renovation.
I am a tremendous fan of spunky, locally-owned businesses and I'd love to see Northgate -- a rare family-operated mall in the days when massive REITs own an operate most shopping centers -- make it. But it's more important to the city and the neighboring community that the center be a success. So, what would I like to see there? I see three logical ways to move forward from the current malaise:
1. Time to sell out and redevelop as a mall. One challenge for the Rands in leasing up Northgate is that Simon, CBL, General Growth, etc. all have deep relationships with mall retailers and can rely on multi-property deals and leases to draw tenants in. From the major retailers' perspective, it's a lot easier to negotiate one set of master contracts and deal with a single corporate parent rather than local mall ownership. As a result, a national owner might be able to help to shore up Northgate's lousy vacancy rate. On a recent trip to San Francisco, I took a look at a project, the Shops at Tanforan, in San Bruno, a middle-class community just south of Daly City and South San Francisco. The 1970s-era mall's anchor tenants (Sears, JCPenney, and Target) had decent sales, but inside the mall, the aging facility had a 40%+ vacancy rate and the facility was not aging well.
General Growth Properties, the developer of Southpoint here in Durham, stepped in and razed the existing mall, building a shiny, steel-and-glass complex in its place. Two years later, the new mall is almost fully leased, with a mix of tenants strikingly similar to those national retailers (PacSun, MasterCuts, Charlotte Russe, etc.) that are already in Northgate -- appropriate, given relatively similar demographics. (Here's an interesting case study on the project.) Admittedly, Northgage doesn't have the benefit of a mass-transit station to draw shoppers the way Tanforan does, but I think the rest of the analogy does hold. This might be the hardest step for the Rands -- who are by all accounts extremely proud of their long history owning and developing Northgate -- to take. But it seems to be the only path for success as a viable indoor shopping mall.
2. Convert to a traditional shopping/power center. North
Pointe has been successful in bringing Costco, Home Depot and the
like to north-central Durham. With a retail 'strip' already in place and
anchored by Guitar Center, Office Depot, and the cafeteria,
redeveloping the remainder of the property to draw in more large retail
seems at least a possibility. This might be the easiest plan to execute, but I think it would miss a much bigger opportunity to help both the mall property and the neighborhood. To wit:
3. Redevelop as mixed use. Paging Mr. Kane... Mr. Kane, are you reading this? Strange as it might seem at first glance, a North Hills-style redevelopment of Northgate could make the most sense of any future for the property. Consider the possibilities--
- Northgate has an overabundance of parking spaces in the form of two now-lightly used parking garages, reducing the up-front cost of building out project infrastructure.
- The mall has very good access to I-85 thanks to the recently-completed widening and upgrades to the Duke/Gregson interchange.
- The new theater and plaza space would be a logical standalone retail facility that could become adjacent to apartments or other housing added elsewhere on the site.
- Macy's would certainly be logical as a standalone retail outlet here, as in so many other parts of the country and even the state. Integrating the monolithic and rather unattractive Sears would be trickier (particularly if there are long-term lease tie-ups, which there might be given Sears' recent renovations to that store) but worth exploring.
Could a North Hills plan work at Northgate? Probably not on the retail side in terms of replicating the type of mix at North Hills. But a residential-focused project with neighborhood retail and some entertainment and dining options could do well.
All of this, however, would depend on the progress and completion of one major project: the East End Connector, which is an important ace-in-the-hole for the property's future economic value.
Today, Northgate sits on a major highway at the northern end of Durham, away from the "retail action" along the I-40 corridor. By the middle of the next decade, however, from Northgate it'll be a 2-mile drive on I-85 to U.S. 70, then a six or seven mile drive down 70 and the EEC to NC 147 and straight into RTP. At the same time, Northgate has a great location just 5 minutes' drive or 20 minutes' walk to Brightleaf and the revitalizing downtown Durham. With a 100% freeway, low-traffic connection to the heart of the region's economy, a new, mixed-use Northgate would be perfectly situated as a residential cluster for young, professional RTP and downtown workers.
No matter what future it has, Northgate has a past that long-time Durhamites are proud of. It's time for Northgate Associates to realize that the ability of reality to match their dreams may be a bigger challenge than they're capable of meeting. The time may have come to pass the baton and move along.