Behind the scenes, a high-stakes game of chicken unfolded for nearly three years. The city of Charlotte calculated that the owners of Eastland Mall (cover story, October 2009) would swerve and take $7.4 million for what was once the state’s premier enclosed mall, now less than half full and bereft of its anchors. The owners, on the hook for a $42 million mortgage, bet that harried city politicians were so desperate to pump up the city’s sagging east side that they would veer and increase their offering by millions.
Neither side gave, and in late April, lender-turned-owner LNR Partners Inc. abruptly steered the mall into foreclosure. “Now, we’ll just have to let them go bankrupt and see what happens,” says Susan Burgess, a City Council member and chairman of its Economic Development Committee. “Obviously, we made them an insulting offer. Nobody bit.” A spokeswoman for Miami Beach, Fla.-based LNR declined to comment.
The company notified tenants — about 50, most of them mom-and-pop shops — they have until June 30 to vacate and warned them not to expect another reprieve. Owners had hinted since 2005 that they might close the mall, but many interpreted the threats merely as pressure on the city — with good reason.
Burgess says more was at stake than the fading, 1.1 million-square-foot, 35-year-old mall, once the state’s largest and the first to feature a food court and ice-skating rink. The city had proposed tearing it down and using the 100 acres beneath it for a mix of retail, residential and business uses. It would have become the terminus of an eight-mile streetcar line from downtown, triggering hundreds of millions of dollars of development along the way.
Council member John Lassiter came up with the $7.4 million offer, expecting LNR to negotiate. Real-estate sources say LNR’s bargaining position might have been strengthened by a slowly rebounding economy and commercial-properties market. It might have been a bluff, says Bob Finley, a finance professor at Queens University and a consultant. But maybe LNR is hoping some developers outbid the city.
In that scenario, the mall could end up with a more agreeable owner than LNR — and that owner might end up dealing with a more agreeable council. An improving economy could boost the chances that the site is redeveloped in partnership with the city, as planned all along. Burgess is still hopeful it will happen. “But it’s going to be a while.”